In response to FSA guidance and adviser demand, MetLife has launched a Capacity for Loss toolkit.

The tool kit will enable IFAs to achieve a deeper understanding of a client’s ability to handle financial loss in the pre-retirement years. It includes a selection of on-line tools including calculators as well as an adviser guide and client facing sales aids, all of which have been developed in conjunction with Billy Burrows of Better Retirement Group.

With FSA guidance specifically highlighting the need for advisers to evaluate a client’s ability to absorb falls in the value of their investments, MetLife believes there is an advice and information gap for advisers who are seeking to be compliant in this area.

Peter Carter, Product Marketing Director, MetLife, comments, “There’s a distinct lack of support material for advisers around the capacity for loss issue and this toolkit should aim to start bridging this gap. Over a client’s lifetime, attitudes to risk change and their capacity for loss decreases. IFAs need to have the tools to offer specific guidance.

“Our research shows that the average 50-year-old has £54,300 saved in pension funds with a gap of £68,600 to fill in order to meet a pensioner’s minimum annual income needs. Most savers in the pre-retirement phase have very limited capacity for loss and, therefore, financial advice is vital. The near-retirement and in-retirement segments need to focus on a range of strategies including investment guarantees and protection products in the light of the continuing very challenging investment returns environment.”

Billy Burrows, Director of Better Retirement Group said: “Most advisers will understand their client’s circumstances but few actually challenge them about their Capacity for Loss. The key to understanding financial objectives is to determine future income requirements, how much flexibility is needed and their risk profile.”

Details of MetLife’s Capacity for Loss toolkit can we found at www.metlife.co.uk/cfl