An individual’s attitude to risk and capacity for loss can change as their circumstances change. This is most evident when it comes to transitioning from saving for a pension to drawing down a retirement income. We worked with Royal London, one of the UK’s largest pension providers, to develop risk profiling tools tailored to both kinds of client
“The risk profiling tool quickly became a strategic requirement to successfully launch our proposition.”
Lorna Blyth, former investment strategy manager at Royal London
Royal London case study: Download full version (PDF)
Royal London launched a suite of multi-asset products in 2009, called the Governed Portfolio range. These nine risk-graded portfolios are designed as off-the-shelf investment solutions for advisers with clients looking to save for a pension.
The advent of the Retail Distribution Review in 2012 meant many advisers were moving to a more holistic approach, focusing on financial planning and a broader service provision. Multi-asset funds built to suit a client’s risk appetite fit this model well – but the regulator has been consistent in its demand for appropriate analysis of client suitability.
As part of its suitability work, Royal London focused on what information advisers would need to ensure they recommended the appropriate portfolio. It opted to work with A2Risk on developing a bespoke risk profiling solution, attracted by our founders’ deep pensions industry expertise and the robust testing we apply to the Attitude to Risk Questionnaire (ATRQ).
We have developed ATRQ to be clear and easy to understand with definitive outputs. It is also relatively short, taking less than six minutes to complete – meaning it is not an onerous task for advisers or their clients.
Transitioning to drawdown
We have developed a strong working relationship with Royal London over many years.
The success of the ATRQ with the Governed Portfolio range led us to work together again on an innovative project in 2012. To address a need for investment portfolios suitable for clients drawing down their pension savings, Royal London launched the Governed Retirement Income Portfolios – which meant a new set of suitability questions was needed.
At Royal London’s request, we reformulated the ATRQ to create a tailored risk profiling tool for the decumulation phase. After research and testing, we introduced five questions specifically adapted for investors taking a pension income.
Royal London supplies the questionnaire as a downloadable form and an online tool for advisers to use as needed.
Follow the link below to find out more about the different versions of the questionnaire, including our Retirement Income Solver, designed to help investors and their advisers choose the most appropriate way to take a pension.