Advice in the retirement sector will largely come from the existing drawdown market in 2020, as advisers step away from defined benefit (DB) and defined contribution (DC) markets, Curtis Banks has forecast.
High professional indemnity premiums and risk of future litigation has seen many advisers move away from DB transfers, which has caused a natural progression to the DC market, the self-invested personal pension (SIPP) provider said.
Meanwhile the introduction of pension freedoms in 2015 led to a boost in the income drawdown market and rapid growth in products available for advisers – but many of these original products are no longer suitable for clients, it added.
Curtis Banks group sales director Dave Stratton said the advice sector was rapidly changing and “where two or three years ago advisers were seeing high levels of clients wishing to move from DB pension schemes into DC products such as SIPPs, this is no longer the case.
“For 2020, it looks set to be the year of the secondary drawdown market.
“This is due to the innovative nature of the pension market and firms creating more flexible investment and drawdown solutions. While there are costs associated with transferring products, in many cases the costs to the client of not transferring are greater.”
Stratton said this would lead to advisers looking for more flexible and innovative products to meet their clients’ retirement needs.
Perceptive Planning director and Chartered Financial Planner Phil Billingham said while his firm gave up its DB permissions in mid-2019, he would like to purely focus on giving advice rather than the “noise” around it.
“What would be really refreshing is if someone was predicting for financial planning work to be a big driver rather than focusing on products,” he said.
“The markets will do what they do and clients have got to get on with real life, with retiring and looking after their families – we’ve got to focus on that. What happens in the budget, in headlines, that’s noise.”
Billingham said he looked to products as a secondary focus to meet his clients’ needs as they came up.