Retirement advice needed

Retirement advice needed

One aspect of retirement advice which is often overlooked is how to treat couples. Our view is that we will only provide retirement advice if both partners are involved and ready to share their financial details in full. We will only provide holistic advice looking at the whole picture. That way we can be sure we’re providing the best advice possible. We appreciate however, that doesn’t work for everyone.

A recent survey by Weslyan (in FT Adviser 9/11/23) highlighted some of the issues often at play, including:

• Overall, 44% of those taking advice are couples, only 11% are single, 6% widowed and 1% divorced.
• 25% of couples admitted to feeling “awkward” about for details of their partners finances.
• 10% said that they had very different plans for their retirement that their partner.
• With 25% saying they were hoping to retire abroad and
• 49% intending to work past the normal retirement date.
• Meanwhile 20% thought that their partner might have a secret stash
• Whilst 10% admitted that they did have hidden savings.
• Another 15% thought that their partner might have debts that they didn’t know about.
• 75% of financial advisers admitted in the survey that they had seen couples arguing when talking about their retirement advice.
• 40% of advisors said that they had actually found “secret” savings when opening up discussions.
• Worryingly 46% of couples didn’t have any retirement plans in place.
• But 20% said that they intended to take professional advice.

Of course, that means that 80% of couples didn’t intend to take any retirement advice. That is a worry as advice can really help couples to understand their options and plan realistic objectives. A survey from AKG looked at the reasons why people didn’t use advisers and found that the most common reasons were:

• Not having enough money to justify advice.
• Not wanting to pay the fees.
• Not needing advice having enough personal knowledge and experience to manage their own finances.
• Preferring to manage their own investments.
• Not trusting advisers.
• Being
• Worried about being pressured.
• Not knowing what the benefits would be.
• Age is also a factor with 68% of people who take advice being over 50 and only 4% under 30.

All of these are good reasons and ones which advice firms need to look at. But there are also non-financial benefits of using a financial adviser. According to Money Marketing (14/11/23) studies in the US have found that using a financial adviser can:

• Reduce stress and have a positive impact on family life
• Create a more harmonious family environment where everyone knows their financial wellbeing is being taken care of.
• Improve financial awareness in younger family members
• Provide emotional support at times of major life events.

All positive benefits worth thinking about.

Looking more into the issue of the rising cost of advice, the introduction of Artificial Intelligence (AI) systems in financial services might help. According to a worldwide survey reported in the FT Adviser, people are more open to AI than was thought.

• 73% said they would trust AI to report on the value of their portfolio
• 71% would be happy to have products recommended by AI
• 65% said it could improve processing updates on personal circumstances and
• 54% thought it might improve customer service
• But only 15% said they would be interested in a fully automated AI service.

So, there is still a place for face-to-face advisers. For the time being at least.

Things may change in the future, however. In the Autumn Statement the Chancellor announced that there would be a consultation on the so called “pot for life” scheme.

This is a proposal to allow individuals to nominate a particular pension provider for their employer contributions. They would continue to use this provider as they moved jobs, which would help eliminate the current problem with lost pensions.

This would cause problems for employers. Currently they set up their own schemes for auto enrolment for all employees. Under the proposals they would need to have arrangements with a broad range of pension providers according to their employee’s preference. Employers argue that their current schemes are designed to offer low charges because of the economies of scale involved. Having to pay into individual schemes might mean that employees faced higher charges. There are also concerns about high-risk schemes being chosen.

All aspects will be considered by the consultation.