Do not scrimp on the fact-finding: knowing and understanding key information about clients is the foundation of suitable advice. This is not just about how much time advisers spend gathering the information, but also making sure they ask questions in a way that collects the depth of information needed. It is important this spans client needs and objectives, as well as other key areas such as knowledge and experience, financial circumstances and health. 

Make sure your risk-profiling approach is retirement-income ready: standard risk profile questionnaires often focus on assessing clients’ attitude to investment risk, but it is also important to find out how each client feels about income security. One way to approach this is to assess how clients would feel about accepting loss and a reduced income. As ever, assessing capacity for loss is also crucial.

Cash flow modelling needs to be robust and explained clearly: cash flow modelling can be an invaluable tool in comparing different retirement income solutions and demonstrating the likelihood of them meeting client needs. But that is only so long as the assumptions underpinning the modelling – in areas like inflation, charges, investment growth and life expectancy – are robust. It is also crucial to ensure clients understand the assumptions the model is based upon and that the outcomes from it are uncertain.

Make sure your withdrawal strategy stands up to scrutiny: there are a variety of methods and strategies available to deliver client income. Companies should ensure they identify the risks of the approaches they use, test how they are likely to perform in different scenarios, and factor this into their advice process. They should also think about the steps they can take to control and minimise these risks on an ongoing basis.

Michael Lawrence is principal consultant at Bovill and former retail investment sector technical specialist at the FCA