This step-by-step guide walks you through how to write a Suitability Report for a lesser used, but ultimately important financial product - the guaranteed lifetime annuity.

This article specifically guides you through how to write a suitability report for guaranteed lifetime annuities from an uncrystallised pension fund. If you want to write a Suitability Report for a crystallised pension plan, this article from our Knowledge Base will guide you through how to do so.

Please note that the following steps can easily be modified to accommodate other sources of capital.

1) Select or add the client

Go to write / view report and select or add the client to whom you wish to write the report.

2) Select the Report Creation Method

3) Create the report

In the Report Details page, give the report a name and select the report currency and Report Type, which in this instance will be Suitability Report. You may also wish to include a Report Reference.

4) The Report Builder

You’ll then be directed to the Report Builder where you will need to add any additional necessary sections from the ‘Available Sections’ drop down to reflect the advice scenario being covered, which in this case will be:

  • Recommended Investment Strategy / Client Risk Profile;
  • Review of Your Existing Pensions; and
  • Drawing Benefits from Your Pension Fund.

5) Complete all wizard sections

Next, you’ll need to step through the wizard sections that require your input, starting with the Introduction section.

6) Complete the Introduction section

Progress through the steps of the Introduction section in the usual way.

a) Client Objectives step

When you reach the Client Objectives step you should select one or more client objective(s) from the standard list or add your own as required. The most relevant advice option to select from the standard Genovo objectives would be:

‘Investigate the best way you can draw benefits from your pension fund to help achieve your needs and objectives.’

Having selected the objective, you should then click on the add kyc info in the right hand column. This will direct you to a new page where you can personalise the wording of the selected objective to reflect the client’s individual circumstances and add some further Know Your Client (KYC) information to it. This is that ‘colour and detail’ that the regulator and compliance are always so keen to see in your reports!

It’s always worth remembering that if none of the standard Genovo objectives quite fits what the client is looking for, you can always add your own custom objective by clicking add advice option.

b) Overview of Existing Provision step

The other step of particular note in the Introduction section is Overview of Existing Provision. You can use this step to provide a brief overview of any existing arrangements the client already has in place that could, in whole or part, help meet their stated objective(s).

Therefore, given the advice scenario, this would be an ideal place to include a brief overview of any other pension arrangements, investments or other sources of income that are being, or could be used to meet the client’s income needs in retirement.

7) Complete the Recommended Investment Strategy / Client Risk Profile section

It’s here that you are going to include details of the client’s attitude to risk and capacity for loss. Given there is no investment element to a guaranteed lifetime annuity, you can ignore the Recommended Investment Strategy step in this section and leave it blank.

By doing so, the name of the section will be automatically changed from ‘Investment Strategy’ to ‘Your Risk Profile’ in the downloaded report.

8) Complete the Review of Your Existing Pension Plans section

Here is where you’re going to include some basic information about the existing uncrystallised pension plan(s) from which you’re recommending benefits are taken.

a) Plan Summary step

Remember you don’t have to enter a value for all fields in the Plan Summary step, and fields which are left empty won’t be included within your report. Given the advice scenario, I certainly wouldn’t waste time creating a Current Investment Strategy for the plan(s) you include here.

b) Money Purchase Pension Benefits & Features step

It is in this step that you should summarise any pertinent benefits and features of the existing pension plan(s). For example, this would be an ideal place to include details of any tax-free cash entitlement in excess of 25% or guaranteed annuity rates that the existing plan may benefit from – especially if these will be lost on transfer.

c) Recommended Action step

In the Recommended Action step, you will need to confirm what action you are recommending in respect to the plan(s), which in this case will be either:

  • ‘Take benefits directly from’ – If you are purchasing an annuity with the existing provider; or
  • ‘Take the open market option and vest’ – If you are purchasing an annuity with a different provider.

9) Complete the Drawing Benefits from Your Pension Fund section

It’s within this section that you’re going to include details of the guaranteed lifetime annuity that you’re recommending the client uses to draw benefits from their pension fund. You will need to complete this section irrespective of whether benefits are being taken via the existing provider, or a new provider via an open market option.

a) Plan Summary step

Much like the review section, it’s in this step that you’re going to include details of the new annuity plan that you’re recommending. Remember you don’t have to enter a value for all fields in the Plan Summary step, and fields which are left empty won’t be included within your report.

It is also worth remembering that although this article assumes benefits are being taken via a guaranteed lifetime annuity, Genovo also caters for:

  • Enhanced / impaired life annuities;
  • Fixed term annuities; and
  • Investment-linked annuities.

b) Why Withdrawal step

This step has been designed to allow you to confirm the reason(s) why the amount and type of withdrawal has been recommended. Clearly, the reasons selected here should relate closely to the client’s needs and objectives.

c) Annuity Options & Benefits step

This is a conditional step that is triggered when an annuity is selected in the Plan Summary step. It’s here you should confirm the basis on which the annuity plan is being established and why you are recommending the selected basis.

10) Complete the Important Information section

This is the last section you’ll need to complete and is self-explanatory.

11) Tailor the structure of the report

Having completed all the wizard sections, you should then tailor the structure of your report by unchecking any sections you do not wish to include in your report; and then change the sort order of any sections to reflect your personal preferences. Personally, I always hide the Appendix – Attitude to Risk Profiles section as I feel this just bulks out the report unnecessarily.

You’ll find more information about how to remove optional sections from your report here.

You’ll find more information about how to reorder the sections here.

12) Download the report / covering letter

Click the download report / download cover letter icon and the report / covering letter will download to word.

Report template and preconfigured advice scenario

Having created the report, you may then wish to convert it into a template and save it to your Report Template Library to use as a starting point for creating future annuity reports.

Hope that helps!