Retirement income advice under review by the Financial Conduct Authority

10 October 2025

The FCA’s review of retirement income advice reveals key shortcomings and actions advisers can take to improve compliance.

Article last updated 10 October 2025.

What the Financial Conduct Authority (FCA) found and what it means for advisers

Retirement income planning comes with high stakes. For clients, it shapes their financial future. For advisers, it’s an area under growing regulatory scrutiny. That’s why the FCA launched a thematic review (TR24/1), published in March 2024, into how retirement income advice is delivered. With pension freedoms introduced in 2015 and the Consumer Duty coming
into force in July 2023, the regulatory landscape continues to shift, placing greater scrutiny on firms and increasing pressure on advisers to demonstrate robust controls. As oversight grows, so too does the demand on already limited internal resources.

The way clients access income in retirement has changed, with more staying invested and drawing down flexibly over time. This shift brings a new set of risks and considerations that advisers must assess and incorporate into their advice process. It also changes the nature of retirement conversations, requiring a more structured, forward-looking approach.

Why did the FCA launch a review on retirement income advice?

The move from accumulation to decumulation brings new challenges and new risks. With fewer retirees securing guaranteed income through annuities, more are relying on drawdown or lump sum withdrawals, leaving them exposed to market volatility, inflation and longevity risk throughout retirement.

Recognising these shifts, the FCA wanted to ensure that advice processes, many originally built around centralised investment propositions (CIPs), were evolving to address this new environment. The review reflected a growing view that these differences warrant a distinct approach: one that pivots towards a centralised retirement proposition (CRP).

The move from accumulation to decumulation brings new challenges and new risks.

What the FCA found: common shortcomings

The review included a survey of nearly 1,000 firms and a desk-based file review of 24 advice businesses. While there were examples of strong practice, the overall picture was mixed. Key areas for improvement included:

Cashflow modelling and sustainability. Some firms weren’t using cashflow modelling or guide withdrawal rates to assess income sustainability. Others used them inconsistently or failed to stress-test assumptions.
Risk profiling. Many firms failed to distinguish clearly between a client’s attitude to risk and their capacity for loss, which is a vital distinction in retirement planning.
Fact-finding and documentation. Client files often lacked essential details such as income needs, expenditure, other pension entitlements or state pension forecasts. In some cases, firms couldn’t demonstrate how or why a recommendation had been made.
Lack of a documented CRP. Some firms were still relying solely on accumulation-focused CIP, without a clearly defined CRP tailored to retirement income planning.

Why it matters: the risks of poor advice

While a CIP is typically designed to grow capital within a client’s risk tolerance, retirement advice requires a different lens. The focus shifts from managing volatility in accumulation to sustaining income in decumulation by taking into account new factors like longevity, inflation, sequencing risk and withdrawal strategies.

The consequences of unsuitable advice at this stage can be serious and difficult to fix. The FCA highlighted several potential harms, including:

Drawing too much income too soon, increasing the risk of running out of money.
Paying unnecessary tax charges or high fees. Choosing complex products that don’t match the client’s understanding or tolerance for risk.
Missing the chance to secure appropriate guarantees or benefits.

For vulnerable clients, the risks are even greater. That’s why robust advice processes and strong documentation are now a regulatory expectation, not simply an optional extra.

Real-world impact: why structure matters

Take, for example, a client with £400,000 in drawdown, modest income needs and a strong preference for capital preservation to support an inheritance goal. Without a structured approach, an adviser might default to the long-standing 4% withdrawal rule, which in the past has been used to estimate sustainable income over a 30-year retirement.

However, in today’s environment of lower expected returns, rising inflation and greater longevity, this rule of thumb is increasingly viewed as too simplistic. It doesn’t factor in sequencing risk, tax considerations or the client’s broader financial position, including other income sources or varying spending needs over time. A robust CRP helps address these nuances through personalised modelling, review and adjustment.

The RIAAT tool: a practical way to test your advice model

To help firms assess their approach, the FCA developed the Retirement Income Advice Assessment Tool (RIAAT). Originally used as part of the review, the tool is now publicly available and provides a structured way to assess suitability across key areas.

RIAAT looks at:

The quality and completeness of fact-finding.
Whether advice is aligned with client objectives and risk profiles.
The design and documentation of retirement income strategies.
How well firms deliver ongoing service and demonstrate Consumer Duty compliance.

It also helps demonstrate how your firm is putting Consumer Duty principles into practice, from evidencing suitability to supporting better client outcomes. As the FCA increases its focus on file reviews and data-led supervision, RIAAT gives firms a chance to get ahead of the curve.

The FCA’s message is clear: retirement income advice needs its own dedicated structure and rigour. Firms should move beyond generic investment advice models and develop a robust, documented CRP tailored to the decumulation phase.

A call to action for advisers

The FCA’s message is clear: retirement income advice needs its own dedicated structure and rigour. Firms should move beyond generic investment advice models and develop a robust, documented CRP tailored to the decumulation phase.

Now is a good time to:

Review your advice process to ensure it supports sustainable income in retirement.
Strengthen your use of cashflow modelling and stress testing.
Reassess risk profiling tools to distinguish between attitude to risk and capacity for loss.
Ensure you can evidence how and why your recommendations support long-term income
sustainability.
Use the RIAAT tool to test your approach and support internal file reviews.

Documenting your retirement advice approach also has commercial benefits. It helps standardise client experience across the firm, supports training for new advisers and can improve operational efficiency, particularly when dealing with clients who have more complex needs or mixed asset bases. Improving your process isn’t just about compliance. It helps build client trust, reduces complaints and strengthens your overall value proposition.

How Rathbones can help

We understand the complexity of planning for retirement income and the importance of getting it right. Our investment managers work with advisers to help deliver sustainable, risk-aware investment strategies that support a wide range of retirement goals.

We can also support your firm in designing and implementing a CRP that aligns with regulatory expectations and client needs. Whether you’re refining your existing approach or starting from scratch, we’re here to help.

What's next?

To explore how we can support your advice process, please speak to your Rathbones business development director or complete the form below and our dedicated adviser support team will be in touch.

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