The recent release of the FCA’s retirement income advice thematic review has provided some much needed regulatory expectations around cashflow forecasting. The review sets out a range of concerns and some guidelines on how advisers should be undertaking cashflow forecasting with their clients, particularly when providing advice on taking income in and at retirement.
With more retirement income products becoming available, the review is timely. These new income solutions play a critical role in many retirement portfolios, providing advisers with a broader range of options for those clients looking for some certainty in when it comes to the level of income they require. It is therefore integral for these solutions to be easily accessible within your cashflow tools.
To support this, we’re delighted to introduce a new integration between FE CashCalc and Just, which provides a unique feature within our cashflow modeller that will dynamically adjust your cashflow plans to account for any guaranteed lifetime income you’re looking to offer a client.
The Just Secure Lifetime Income solution (SLI) is integrated directly into your clients SIPP and is designed to deliver a guaranteed income producing asset. The remaining SIPP assets can then complement this secure income by providing long term growth and any future unexpected income requirements.
Generate an indicative quote
Just SLI can be added for clients aged 55 – 90 who have a pension in their cashflow. It can be selected through the ‘Quick-add’ drop down menus in the ‘Contributions & Withdrawals’ and ‘Income & Expenses’ tabs and through the Cashflow Modeller.
This new integration provides a dynamic quote, where a user can quickly source an indicative figure from Just to understand the level of income that could be paid on different client scenarios. Quotations can be made on an income required or premium to invest basis for flexibility.
The client’s postcode and health data will be pulled through if available in a digital fact find in FE CashCalc, or will need to be entered manually.
Analyse cashflow plans
Once added, your current client cashflow will automatically adjust to account for the guaranteed income now being paid. The guaranteed income is treated as being retained in the SIPP. The valuation of the SIPP is adjusted in the forecast to represent the purchase and cash-in value available each year. The cash-in value is locked and excluded from the growth calculation. This enables the forecaster show the potential impact of reinvesting all or part of that secured lifetime income over the course of the forecast.
The cash-in values will also dynamically be accounted for and new survival rate markers will appear, to give you and your client a better understanding on the client's survival probability.
Stress-test your recommendations
Cloning the forecast will then allow you to quickly compare the results and to better evaluate the monetary difference between a SIPP with and without the SLI solution.
The cashflow plans can be further assessed using the Monte Carlo tool and Market Simulations feature to ensure that the level of analysis has been sufficiently stress tested to ensure suitability.
The highly visual nature of FE CashCalc enables you to clearly demonstrate both outcomes and have meaningful conversations with your clients on their retirement plans and demonstrate future income flows and capital growth, enabling informed investment decisions and better outcomes.
With the FCA now scrutinising both the role of cashflow tools within retirement advice and retirement advice more broadly, this new development will play a key role in helping advisers fulfil their obligations in this space. The integration will help advisers understand the role and impact of these new income solutions and allow them to better model different retirement scenarios with their clients.
This exciting development is now available to all FE CashCalc users and the video below illustrates where to find the new feature and how to use it.
As always, if you have any thoughts or ideas for improvement, please don’t hesitate to let us know. And if you would like a live 1-1 demo to see this new feature in action, please don’t hesitate to get in touch.
