Why managing risk in retirement is different for advisers and their clients

12 November 2025

Retirement changes risk. A CRP helps advisers manage decumulation with structure, clarity and confidence for lasting client outcomes.

Article last updated 14 November 2025.

How decumulation changes the risk landscape and why a strong centralised retirement proposition (CRP) matters more than ever

In retirement, familiar risks take on unfamiliar consequences. A market dip, a modest overspend or a poorly timed decision can quietly derail a carefully built financial plan, often without warning. That’s why retirement demands a different approach to managing risk.

The shift from saving to spending isn’t just a financial transition. It’s a structural change in how advisers need to plan, support and communicate with clients. A strong centralised retirement proposition (CRP) helps firms manage the unique risks of decumulation consistently and effectively.

The moment everything changes

During the accumulation years, volatility is often seen as a temporary hurdle. A dip in markets may be unsettling, but time is usually on the client’s side.

That changes the moment withdrawals begin. Every pound taken out of the portfolio reduces its ability to recover from losses. Risks start to interact in new ways and clients often feel more anxious, more reactive and more dependent on advice. A CRP provides a framework for managing these risks with clarity, consistency and care.

Retirement’s unique risk landscape

Here are five key risks that behave differently and more dangerously in retirement:

Sequencing risk: the order of returns matters more than the average
Poor returns early in retirement, combined with income withdrawals, can permanently damage a portfolio’s sustainability. Even with the same average return, the sequence of gains and losses can lead to vastly different outcomes.
Longevity risk: clients may live longer than they expect¹
A 65-year-old today has a one-in-four chance of living into their 90s. Without a plan that accounts for extended life expectancy, clients risk exhausting their assets too soon.
Inflation risk: small percentages compound into big problems
At 2% inflation, the cost of living can rise nearly 50% over 25 years. If income doesn’t keep pace, clients may need to reduce spending or dip further into capital to maintain their lifestyle.
Withdrawal risk: the biggest danger may be the client’s own actions
Taking too much, too soon or withdrawing at the wrong times can drain capital faster than expected. Without structure, spending can easily outpace portfolio returns.
Behavioural risk: emotions are amplified in retirement
Clients are more likely to act on fear, shift to cash during downturns, or make decisions driven by headlines. With fewer working years left, these missteps can have lasting consequences.

What makes these risks particularly challenging is how they interact and shift over time. A strategy designed to minimise sequencing risk, for instance, may reduce equity exposure and inadvertently increase exposure to inflation. Meanwhile, inflation and longevity risks typically diminish as a client ages.

No single investment solution can mitigate all risks equally, especially when they arise from factors outside the client’s control. That’s why flexibility, personalisation and regular reviews are essential. Each client’s journey is different and their retirement strategy needs to evolve accordingly.

A tale of two retirements

Consider two clients, both aged 65 with £500,000 invested. One has a CRP in place. The other does not.

Sofia, a retired marketing consultant in Manchester, is working with an adviser who uses a CRP to map out her retirement income. They agree on a 4% annual withdrawal rate, test it against market downturns and inflation, and review her position each year. When markets fall in her second year, Sofia stays invested, confident in the plan and its resilience.

David, a self-employed accountant in Cardiff, decides to take £50,000 up front to help a family member, without a clear income strategy. When the market drops 10% shortly after, he panics and moves to cash. His portfolio never fully recovers. By year 15, his capital has significantly eroded, and he’s facing difficult choices about how much income he can continue to draw.

The difference? Not just returns, but the presence of a plan and the confidence that comes with it.

The risks clients face in retirement aren’t new, but their impact has changed. Without structure, even well-intentioned advice can fall short.

How a Centralised Retirement Proposition helps manage retirement risks

A CRP gives advisers a structured way to address the risks of decumulation. It brings together investment strategy, income planning and risk management into a consistent process that still allows for personalisation.

A strong CRP typically includes:

Sustainable withdrawal planning based on cashflow modelling and scenario testing.
Defined strategies tailored to different client needs (such as natural yield, bucketed and total
return)
Realistic assumptions for longevity, inflation and investment returns.
Ongoing reviews and adjustment mechanisms.
Clear documentation for compliance and Consumer Duty alignment.

Crucially, a CRP also helps advisers set expectations. It gives clients the confidence to stay invested, the clarity to understand what their money is doing and the structure to stay on track when things get bumpy.

Why it matters for advisers

Retirement advice is no longer limited to managing investments but now focuses on achieving meaningful outcomes. That includes income sustainability, client understanding, emotional resilience and long-term financial wellbeing.

A well-structured CRP helps advisers:

Deliver consistent, high-quality advice across all retirement clients.
Reduce regulatory risk by documenting suitability and demonstrating process.
Strengthen relationships by guiding clients through times of uncertainty.
Position themselves as trusted retirement specialists, not just product selectors.

In an outcome-focused regulatory environment, advisers who can demonstrate a robust, structured approach to decumulation are better equipped to serve clients and stand out in the market.

Conclusion: plan for risk, not just returns

The risks clients face in retirement aren’t new but their impact has changed. Without structure, even well-intentioned advice can fall short. With a CRP in place, firms don’t just protect clients from hidden risks — they deliver reassurance, clarity and confidence in retirement.

In an increasingly outcome-focused, regulated environment, that’s not just good advice. It’s good business.

To find out more or speak to a member of our team, please get in touch via the form below.

Footnotes

Source: www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpect
ancycalculator/2019-06-07

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