Communicating the benefits of advice: Why there’s still more to do

In my Job as a Financial Adviser, I try to communicate and demonstrate, and if by doing so effectively, I can educate my client in my one-to-one client interactions.  And that is important because as people move from the world of work to one of retirement, financial planning can be genuinely life changing.

However, recent research from YouGov, the Research Group, to coincide with the third anniversary of Pension Freedoms, has shown that the wider public awareness of the value of advice is lower than might have been hoped.

Only one in 3 expect to seek advice

The introduction of Pension Freedoms (more of that in a moment), coupled with heightened interest in Defined Benefit Final Salary pensions, mean that we, like most advisers and planners I speak to, are incredibly busy.

Despite that, the survey found that the ‘value of advice’ message isn’t getting through to most people; only 32.08% of the over 50s who have not yet retired expect to seek financial advice about their retirement in the future.

Unsurprisingly, the likelihood of taking advice increases as people get closer to more traditional retirement ages. Even so, millions will retire without seeking any form of financial advice.

Pension Freedoms represent the single largest change to retirement planning during my financial services career. Used correctly it can help people retire more flexibly, moulding an income to their lifestyle and potentially leaving a financial legacy when they are gone.

Conversely, there’s no doubt Pension Freedoms also present a threat if poorly thought through decisions are made.

Pleasingly, among 50-64-year olds 63.84% of people are aware of the rules. However, that leaves approximately around 4.5 million adults potentially in the dark about Pension Freedoms; if they don’t know about them, how do they take advantage of the opportunities and avoid the threats?


Make no mistake, there’s a huge need for advice.  Give us a call and lets have a chat.

The Impact of Living Longer on Retirement Planning

Since the pension reforms of 2015, investors have a greater degree of flexibility and choice when accessing their savings. Significant though the reforms were, they have to be seen within the context of other changes affecting retirement, particularly demographic developments.

Accelerating life expectancy

Accelerating life expectancy means that a 65-year old man in the UK has an average of 18.5 more years of life ahead of him, while women of that age will live on average for another 20.9 years, according to the most recent data from the Office for National Statistics. These are averages, of course – someone could live for just one or two years in retirement, but there’s also a growing chance that they could live to 100. A retiree with sufficient savings to get them to 85 could still be left with an empty pension pot if they live beyond that point.


It may be surprising to learn that people tend to misjudge how long they are likely to live. A study recently showed that those aged 55-70 significantly underestimate their chances of surviving to greater ages. As a result, they may fail to take the required measures to prepare for a longer retirement.


Another error that people can make is to overestimate the level of income they can expect in retirement. Research has shown that in some cases the average income is considerably less than the amount they’ll need to be “financially comfortable”.

Unexpected outgoings

There may be many unexpected demands made on savings in retirement, including those from ongoing debt repayments such as mortgages, financial support for children and long-term care. These can be substantial.

From DB to DC

The decline in defined benefit (DB) (known also as Final Salary) schemes – when many workers retired with the security of an income until death – has created difficulties. Due to insufficient private pension provisions and rising life expectancy, the move to defined contribution (DC) (known also as Money Purchase) schemes has placed far greater responsibility on individuals for their pensions.

Considerations for planning

Careful planning needs to take into account investment risk, inflation, the risk of expenditure such as long-term care and mortality drag. Mortality drag refers to the need for drawdown investments to work harder – as investors become older – if they’re to provide the same income as an annuity. Unlike those annuitants who live longer than average, and who benefit from the cross-subsidy inherent in risk pooling, drawdown investors don’t have pooled risk in place.

Annuities: still working hard

This is why annuities – though waning in popularity – remain an important component of the at-retirement product suite. Investors are more likely to enter drawdown when they reach retirement. But an annuity option remains open to them, and may become attractive if maintaining a sustainable income from drawdown proves too demanding.

Ageing and decision-making

Another feature of ageing is its tendency to bring about cognitive decline. This can affect people’s abilities both to make decisions and to seek help with making decisions. And that includes financial decisions. Yet, despite their cognitive decline, people’s tendency to be confident in their decision-making remains. This is an important but difficult subject to bring up with clients.  Cognitive decline, dementia and Alzheimer’s disease will affect more people as longevity increases.

Awareness of the challenges

Being aware that living longer brings many financial risks is not enough in itself to solve all the problems. But it’s a sound basis on which to build a robust investment strategy.


Call us if you would like some advice


Claire Trott: Public still has it wrong on pensions versus property

Latest statistics show personal pensions, in particular, get a bad rap

The recently published preliminary estimates from the Office for National Statistics’ Wealth and Assets Survey make for interesting reading with regards to how people view pension savings and how safe they are.

This survey has been run numerous times in recent years and it is always clear those questioned see employer pensions and property the safest way to save for retirement. They have actually attracted an even greater share of the votes in the last two rounds of the survey than previously.

The fact employer pensions saw 40 per cent of votes is a good thing but it does not tell the whole story. I wonder how much of this increase is because of automatic enrolment.

What is disappointing is that only 13 per cent thought that personal pensions were the safest way to save. With the move from defined benefit schemes to defined contribution schemes, there will be very little difference in the two. The fact employer schemes should at least have some additional contributions may make them more popular but it does not make them any safer.

It will be interesting to see if this becomes more aligned in future when DB schemes become even rarer.

On the flip side, when looking at which method of saving for retirement will make the most money, employer pensions came in a poor second, with 22 per cent of votes.

The top spot went to property, with 49 per cent. While this is no surprise, it does begs the question as to whether this is the right way for the public to consider it.

I know that the question put to the voters was not about what they had actually invested in but it is clear that those looking for bigger returns consider property to be the best option.

Of course, this is often not the case.

As we know, pensions offer tax relief and tax free growth while invested, whereas property has ongoing costs, costs when finally sold and tax on profits.

And personal pensions? 6 per cent of those surveyed believed they would make the most money. This is the most disappointing finding. We all know they are able to invest in the same, if not a more diversified, range of assets than the employer schemes and even property in some cases.

The need for education about retirement options is still clear. Retirement is not a single investment at a single point in time. All the options in terms of saving for the short and the long term need to be considered. All savings can work for retirement; clients do not need to put all their eggs in one basket.

As always, advice is key as they progress through life.


Claire Trott is head of pensions strategy at Technical Connection

Employers turn to IFAs to help workers retire on time


Steve Bee: Make way for the next generation of Waspi women

A Well Respected Pensions Expert, Steve Bee, recently wrote the following article in one of the Industries Technical Press publication.  I thought it would be of interest to you if I shared it.

Mishandling of the recent rapid increases in the state pension age have had a devastating effect on many women

There are three main ways to provide ourselves with income when we reach later life. We can invest into a pension scheme ahead of time while at work, we can rely on future taxpayers in the form of the state pension, or we can simply carry on working for the time we are fit and able to do so.

It is dangerous to rely on just one of these types of income provision, so a mixture of all three is the ideal strategy.

The problem we have in the UK is that, for more than half a century, just half of our working population has ever been given access to company pension schemes. As a result, half the population has ended up relying entirely on the state pension if they want to give up working later in life.

While it is true those without company pension schemes available to them could have deferred income and invested it in a personal pension, it is equally the case that, in company schemes, it has been contributions by employers, not employees, that have made up the bulk of the money invested.

Deferring income through not being given access to it in the first place is clearly a more effective way of maximising long-term pension savings.

So, half the population has always earned two forms of money while at work: ready money they could spend on day-to-day living and pension scheme money they could not spend until they were older.

These people have been lucky enough to reach old age with many options available to them in terms of income and security. They have both their private pensions and their entitlement to the state pension, and they still retain the option of continuing to work to earn a further income stream.

The other half of the working population that has not had the benefit of their employers investing substantial amounts of deferred income on their behalf have been dangerously dependent on the state pension or their own ability to carry on working.

Steve Bee: “Our pensions system has lost its purpose”.

That is why the mishandling of the recent rapid increases in the state pension age have had such a devastating effect on so many women. It is women who have been (and will be) most severely affected by the equalisation of state retirement age with men and the subsequent increases in that common state retirement age.

It is hardly surprising that the Women Against State Pension Inequality (WASPI) protest movement formed as a result of such fundamental but poorly communicated and hurried reforms.

That movement will not be going away any day soon, as the next decade will see those born in the sixties affected, with many of those also finding they will need to work until their late-60s before they can retire on the state pension.

One long-standing problem remains: we are content to see half the working population reach retirement with so few options available to them.