This website is for financial advisers within the UK, Customers looking for Zurich products please go to Zurich.co.uk. Unless you are a financial adviser in the UK who has entered into separate contractual arrangements with Zurich Intermediary Group Limited (“ZIG”) for access to the secure parts of this website, the viewing of this web site is subject to Disclaimers, which, by continuing to access this site, you acknowledge that you have read and accept.

We use cookies to provide you with a responsive service to make your experience of our website(s) better. Please confirm that you agree to our use of cookies in accordance with our cookies policy.

By continuing to use our website we will assume that you are happy to receive non-privacy intrusive cookies. Please be aware that if you disable cookies some functionality on the site will not work.

Alternatively, read our cookies policy to find out more about our cookie use and how to disable cookies.


Platform due diligence: How to manage withdrawals and income

03 May 2016

Discovering the detail on how cash is paid from your preferred platform (s) can make a world of difference to your clients, writes Alistair Wilson…

Pension freedoms have seen more clients than ever take the opportunity to release income through flexible access drawdown. This places greater responsibility on those saving for retirement to understand what their options are for taking income, decide on the lifestyle they desire once they stop working and, of course, work out how much it will cost.
Advisers have an important role to play to support their clients in the planning process and help them understand their financial position. It’s widely accepted that platforms also have a major part to play in…

  • Supporting advisers and clients to deliver the income;
  • Providing investment flexibility for the remaining funds;
  • Adapting to the client’s lifestyle as it changes.

Moreover, platforms must help and not hinder with some of the more practical aspects of the planning process. In this world of increasing focus on due diligence, ask your platform providers how they are helping adviser firms to ensure there is enough cash available so that clients are paid the right level of income every month or quarter across all tax wrappers. (Don’t forget to ask this question if you use model portfolios, run either by your firm or through third parties like discretionary fund managers.) In asking this, you are looking to understand more about the challenges of cash management and how the platform can help you.

With many platforms, withdrawals (regular or one off) are taken from a cash element (there are a number of terms used for this in the market) within each tax wrapper, rather than only ‘encashing’ to meet ongoing requirements. Some platforms will leave it up to you to ensure there is sufficient cash available for every client, every month. They may even alert you to the fact there isn’t enough money to meet the income payment. How practical it is to keep checking a client’s cash position will depend on the processes within your business. One thing is for sure; advising in the ‘at retirement’ space will increase the need for a robust and scalable business process, given the increasing number of clients holding money in drawdown. If there isn’t a process in place, potentially the first phone call you will receive will be from your client asking where their income is.

Understanding whether a platform provides you and your clients with some form of automated disinvestment strategy, thus ensuring the client is always paid, is one way of controlling the risk to your business as well as the risk of the client not receiving their income – a good outcome for all concerned.

It’s also worth finding out how long it would take from start to finish to get money to a client if you do have to make a one-off payment as a result of there being no cash available and what, if any, additional costs would be imposed.

It is important to ask the right questions of your platform to see if it is supporting you and your clients – or not.

Related Articles