With the Financial Conduct Authority (FCA) emphasising the importance of accurate and justifiable cashflow modelling in retirement planning, Wealth Management firms must ensure their processes meet regulatory expectations. With increasing regulatory scrutiny on the Wealth Management industry too, it is more important than ever to demonstrate that the financial forecasts upon which firms and their advisers are relying are accurate, reasonable, and aligned with client circumstances.

To meet these evolving regulatory requirements, firms must move beyond deterministic models and embrace stochastic cashflow modelling - a method that provides a range of potential financial outcomes, helping clients make better-informed decisions under different market conditions. This is where Ortec Finance delivers a significant advantage.

Aligning with FCA Expectations: The role of OPAL Financial Planning, by Ortec Finance

Accurate and justifiable forecasts

Avoiding reputational risk is a key concern for firms when providing advice for their clients, which can be mitigated using sufficiently reliable and powerful tooling.

One of the FCA’s primary findings in its assessment of cashflow modelling was that many firms rely on projections that do not align with actual client needs when giving advice. The Regulator wants firms to ensure, among others:

  • They have a reasonable basis for their present and future expenditure estimates, which consider a sufficiently broad set of the costs required to meet clients’ needs.
  • Forecasts properly account for taxation, charges, and the impact of inflation.
  • They are accounting for the dynamic nature of their clients’ personal circumstances throughout time, particularly through retirement, and how this can result in changing expenditure.

OPAL addresses these challenges with its holistic goals-and-scenario-based approach. Advisers can define an unlimited number of both present and future client goals, representing their client’s various aspirations. Similarly, OPAL can capture a complete picture of financial commitments, by way of current and future incomes and expenditures, assets and liabilities, properties, pensions, charges and taxes among others.

It should be noted that this naturally relies upon firms also ensuring that that client data is complete, accurate and up-to-date. Likewise, that they consider all sources of current and future income, including state pensions, investment returns and property income. To this avail, however, OPAL’s ability to fully integrate with CRM systems, such as Salesforce, can ensure that all data which is captured within this single source of truth seamlessly flows into the forecasts.

Managing uncertainty

Reassuring Clients and the Regulator that firms can manage retirement uncertainty is another key issue to address.

Clients can perceive overly simplified financial projections as certainties, creating a false sense of security around their retirement income. The FCA has therefore urged firms to model alternative scenarios, including:

  • Market downturns at the start of retirement, reflecting historical benchmarks of asset price declines.
  • The impact of lower-than-expected investment returns, helping clients understand risk exposure.
  • Longevity risk assessments, ensuring clients do not underestimate their lifespan and outlive their assets.

Indeed, planning beyond average life expectancy, undertaking stress testing, and the consistent use of real (vs nominal) terms were three of the explicit points of improvements for firms from the FCA1.

OPAL addresses all the aforementioned requirements into one user-friendly solution.

Unlike static models that assume fixed return rates, OPAL employs stochastic cashflow modelling, simulating a plethora of potential market conditions to illustrate the full spectrum of financial possibilities. Our 35+ strong team of Econometricians, Economists and Data Scientists work tirelessly to continuously maintain the Capital Market Assumptions that power our Economic Scenario Generator. This world-class engine, which powers the calculations behind OPAL, creates 1,000 realistic, forward-looking economic scenarios which our software tailors to your client’s specific circumstances.

These are instantly quantified into the future, to represent the range of potential future situations your client could encounter. This approach helps advisers provide clients with a realistic, probability-based view of their financial future, reducing the risk of overly optimistic expectations. While a full exploration of the economic scenarios accounted for with the model is beyond the scope of this paper2, clients can rest assured that a very broad scope of situations are factored within. These are included but not limited to; market downturns, geopolitical risks, inflation and interest rate changes, multi-country GDP variations, and even the possibility of future pandemics.

As such, the scenarios are heavily stress-tested from the outset by design. Likewise, they are also back-tested in order to affirm the validity of our claims3. Finally, OPAL can forecast 60 years or more into the future, addressing concerns around longevity risks, and can also display all data in either real or nominal terms to facilitate both FCA-compliant and easy-to-understand conversations with end clients respectively.

Clear and transparent client communication

One of the FCA’s key expectations is that firms present financial modelling outputs in a way that is clear, consistent, and easy for clients to understand. Using multiple, inconsistent growth rates across different communications can lead to client confusion and misinterpretation.

OPAL enhances clarity by:

  • Presenting interactive visual reports that simplify complex projections and depict a distribution of outcomes within an easy-to-understand wealth projection
  • Offering side-by-side scenario comparisons (via what-if plans), helping clients grasp the implications of different financial decisions.
  • Ensuring transparent cost breakdowns, showing how charges impact fund sustainability over time.

Advisers can thus visually illustrate this range of likely future scenarios for their client, supporting them in facilitating good outcomes as per The Consumer Duty.

By improving client comprehension, wealth management firms using OPAL can enhance trust, reduce regulatory risk, and ensure compliance with Consumer Duty standards.

Building resilient retirement plans with stochastic modelling

As regulatory expectations around retirement planning advice continue to evolve, firms must adopt more sophisticated, evidence-based modelling approaches to ensure compliance and improve client outcomes. OPAL provides the tools needed to meet FCA best practices, offering a powerful combination of accurate data handling, scenario stress testing, and transparent client communication.

With stochastic cashflow modelling, firms can go beyond basic projections and provide clients with a realistic, risk-adjusted view of their financial future—ensuring that retirement plans remain robust, adaptable, and aligned with regulatory expectations.

Of course, a goals-based planning approach will also significantly contribute to supporting the client to successfully achieve their goals. After all, the more concrete the goals are, the more willing clients are to set aside money for them. Long-term guidance, combined with the client’s commitment, will also lead to higher client value and growth in overall AUM.


For more information on how OPAL can support your firm's retirement planning advice within FCA requirements, contact roxanne.mehdyoun@ortec-finance.com.

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1 FCA report Undertaking cashflow modelling to demonstrate suitability of retirement-related advice (20.3.2024).

2 Further details regarding scenarios available upon request.

3 Back-testing data available upon request.

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