How to produce a suitability report advising a client on a pension sharing order

How to produce a suitability report advising a client on a pension sharing order

Richard Lent

IMPORTANT – This user tip relates to an older version of Genovo. Although much of the content and many of the concepts still apply to the current version of Genovo, the screenshots and some instructions may no longer be accurate.

Welcome to December’s user tip blog…

This is my last blog for 2020 and what a year it’s been! Even with everything going on in the world, here at Genovo we’ve managed to continue our programme of enhancements to the app, and we have more planned for 2021.

Divorce is unfortunately relatively commonplace these days. In fact, a recent BBC report suggests that the COVID19 lockdown has seen a huge increase in people searching for advice on divorce.

Here at Genovo, we often get asked how to produce a report to detail advice around pension sharing orders. We’ve implemented some changes this week to make the process simpler, so I thought I’d put this blog together to explain how to produce a compliant suitability report.

The Report Builder

What sections are required?

I’m going to assume you already know how to add a client and you are starting the report from scratch. Advice on pension on divorce cases should always be detailed in a Suitability Report to ensure you have the necessary disclosures.

The process of building the report is similar to that of a pension switch, so you’ll need a Review of Your Existing Pension Plans (or Review of Your Existing Retirement Income Plans if appropriate) section and a New Pension Recommendation (or Drawing Benefits from Your Pension Fund if appropriate) section. Although you might not be recommending a new plan as such, including a new recommendation section will ensure that the charges disclosure will be dealt with fairly and correctly in your report to meet your regulatory requirements.

You’re also going to need a Recommended Investment Strategy section, as it’s here you’ll confirm your client’s Attitude to Risk and Capacity for Loss, as well as confirming the recommended investment approach for the funds being transferred in. You may also take the opportunity to review the funds in which any receiving scheme are invested, and it’s here you should detail your recommendations.

The review sections

The first step of the review section is the Plan Summary step. It’s here that you’ll need to add all of the plans being reviewed. This includes the pension from which the share is being received, although I appreciate you often know very little about the plan other than the scheme / plan name, the value of the share and maybe the membership / plan number. Remember, you can also over type the Ownership field when adding a plan so you can clearly show who the share is coming from.

Complete the next steps as normal until you reach the Recommended Action step.

Here we’ve added three new recommended actions: –  

  • ‘switch the pension share from’ – to be used for the ceding scheme / plan when switching the pension share into an existing pension the client already holds.
  • ‘set up a new pension to receive the pension share from’ – to be used for the ceding scheme / plan when your client doesn’t have a suitable home for the pension share already, so you are setting up a new pension for them.
  • ‘retain and invest the pension share within’ – to be used for the existing plan that will receive the pension share (if applicable).

Once you’ve selected the reasons why the recommended actions are being taken, complete the remaining steps and that’s the section complete.

The recommendation sections

If you’re recommending the client set up a new pension to receive the pension share, add details of the new plan to the Plan Summary step. If you are transferring the share into an existing plan, you should add the receiving plan to the Plan Summary step and complete the relevant details in the usual way.

In either scenario, the figure entered into the Transfer Lump Sum field should be the amount being received from the pension share.  

Complete the Why Product, Why Contribution and Why Provider / Plan steps in the usual way.

When you get to the Charges step, add details of the charges of the receiving plan in its entirety e.g. if an existing scheme is receiving the transfer and the charging structure is tiered, meaning the overall charge will reduce following the transfer in, insert the charges applicable to the entire value of the combined investment, not just the amount being transferred.

Once this is done, complete the remaining steps of the section with as much detail as required and that’s the section complete.

The Word report

Once the Recommended Investment Strategy section and the Important Information sections are complete, you’re ready to download the report. When the report is downloaded to Word you’ll notice that there are references to the ‘New’ plan throughout. If you are transferring the pension share into an existing arrangement, I would suggest using the find functionality (Crtl+F) in Word to find all instances where ‘New’ is mentioned and tweak the wording to reflect the fact that in this instance the ‘new plan’ is actually an existing plan. 

You’ll also notice the Summary of Plan Charges will detail the charges applicable to the amount being transferred in, in line with MiFIDII requirements.

I hope that’s helped you to get to grips and gives you a better understanding of how to write a pension sharing order suitability report.

If you have any further questions, please do get in touch or submit a support ticket and we’ll get straight back to you.

Further Reading

You’ll also find lots of useful information about everything I’ve covered in our Knowledge Base or by clicking on the links below.

What is the advice options and reasons library?

Video Tutorial: The advice options and reasons library

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Have a great Christmas and a Happy New Year from all of us here at Genovo! Thank you for all your support this year and here’s to a less eventful 2021!

Written by Richard Lent

Richard has worked in financial services for 20 years. Initially working in compliance, Richard later became an IFA. He is diploma qualified and has completed J04, J05 and AF3 qualifications, and continues to study towards chartered status. Richard also headed up the paraplanning function for a large directly authorised IFA firm, where he introduced Genovo as their report writing software of choice. It is this rounded knowledge of the financial services advice process and industry that makes him a valuable member of Team Genovo. Outside of work Richard enjoys walking in the Shropshire countryside with friends and recently took on the National Three Peaks Challenge. The rest of his spare time is spent with his young children.

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