Investment Pathways

Hi All

I wondered what if anything people have added to reports and or your investment process in relation to investment pathways?

COBS 9.3.3A

https://www.handbook.fca.org.uk/handbook/COBS/9/?date=2021-03-31&view=chapter

Thanks in advance.

Nathan

Comments

  • Begrudgingly, yes, when it's a client in drawdown:

    Since writing my original report, the FCA has conducted a review of retirement outcomes. As a result,
    from February 2021, pension providers (such as AJ Bell) are required to offer four investment
    pathways to cater for four retirement objectives, allocating one pathway solution (investment
    solution/fund) to each pathway. The four pathways are:

     Option 1 – no plans to touch my money in the next five years
     Option 2 – plan to use my money to set up a guaranteed income (annually) within the next five
    years
     Option 3 – plan to start taking my money as a long-term income within the next five years
     Option 4 – plan to take out all my money within the next five years

    These new requirements apply to non-advised clients, however, where pathway solutions are
    available through an advised proposition, these need to be taken into consideration as part of any
    recommendation.

    AJ Bell has confirmed that they have four investment pathways available through their SIPP. Whilst
    these have lower charges than BMAM, I believe that BMAM offer a superior service and investment
    strategy. Please refer to my original report for further information why BMAM were originally selected.

  • NathanNathan Member

    @arongunningham that is great, thank you

  • Yes and no. If there is a suitable pathway I include something a little less wordy than Aron (I only cite the pathway that applies to them for example). But there is no requirement to put anything in the suitability report.

    Benjamin Fabi FPFS
    Chartered Financial Planner
  • @benjaminfabi said:
    Yes and no. If there is a suitable pathway I include something a little less wordy than Aron (I only cite the pathway that applies to them for example). But there is no requirement to put anything in the suitability report.

    Thanks everyone for the info.

    Our external compliance team are telling us we need to put something in the SR. Similar to the stakeholder consideration for pension switches. Is that true? She is quoting COBS9.2.1R(1)(a), but I am jiggered if i can find that.

    Looks again the FCA have found and issue and come up with a solution that does very little to actually help clients, just another tick box on the suitability reports.

  • There is no cobs requirement to put anything about investment pathways in the suitability report.

    COBS 9.2 is about assessing suitability, not the content of a suitability report. There is guidance in cobs 9.3 to assess the suitability of an available investment pathway, in order to comply with 9.2.1r.

    The requirements for stakeholder and WPS are in cobs 19.2.2. There is an explicit rule which says that you must explain, in the suitability report, why the recommendation is at least as suitable as those options.

    You could make a case that it is worth putting into a suitability report in certain limited situations, eg if there is a suitable investment pathway option, and this is the approach I take (and hence my "yes and no" reply previously).

    I'm not sure it's fair to blame the FCA for someone's misinterpretation of the rules.
    Benjamin Fabi FPFS
    Chartered Financial Planner
  • @benjaminfabi said:
    There is no cobs requirement to put anything about investment pathways in the suitability report.

    COBS 9.2 is about assessing suitability, not the content of a suitability report. There is guidance in cobs 9.3 to assess the suitability of an available investment pathway, in order to comply with 9.2.1r.

    The requirements for stakeholder and WPS are in cobs 19.2.2. There is an explicit rule which says that you must explain, in the suitability report, why the recommendation is at least as suitable as those options.

    You could make a case that it is worth putting into a suitability report in certain limited situations, eg if there is a suitable investment pathway option, and this is the approach I take (and hence my "yes and no" reply previously).

    I'm not sure it's fair to blame the FCA for someone's misinterpretation of the rules.

    Thanks Benjamin, great stuff!

  • NathanNathan Member

    Thanks all

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