View more on these topics

Billy Burrows: Next chapter of pension freedoms must focus on advice value


Now that the pension freedoms have bedded in it is time to turn to the next chapter of the book. The first chapter dealt with Chancellor George Osborne’s March 2014 Budget bombshell, while the second was devoted to getting ready for the rush to take lump sums from implementation in April.

The next chapter should highlight the importance of advice: why individuals ignore it at their peril, as well as how advisers can make sure they obtain the best outcomes for clients.

I hope to help write this chapter in these pages over the coming months and can think of no better way of doing so than by looking at what I call the “skills of the trade”. Although every adviser has their own retirement income advice process and personalised way of dealing with clients, they all need a number of specialised skills. I have identified the following:

  • Foresight: We cannot predict the future but we can monitor the trends.
  • Relationship skills: Good advice takes account of behavioural and emotional factors.
  • Risk management: Why do most people take too little or too much risk?
  • Product knowledge: Researching the market for all the relevant options.
  • Technical skills: Analysing the value for money and projected outcomes.
  • Taxation matters: Identifying tax efficient income strategies.

In the past some advisers and product providers have been guilty of taking a black and white approach to retirement options by pushing clients with smaller funds into annuities and higher-net-worth ones into drawdown.

This approach no longer stands up to critical examination, as it is now less about financial products and more about the wants and needs of individuals.

In practice this may translate into managing competing priorities. For example, it is not unusual for people to want both income certainty and income flexibility, or the option to invest for future growth while at the same time having a safety net in case markets crash. What is more, leaving a spouse or dependant with a secure income may also be an important priority.

In addition to these retirement objectives, advisers and their clients have to grapple with some of the most difficult questions in personal finance.

For instance, when is the optimum time to purchase an annuity? What is a sustainable level of drawdown income? Or what is the most appropriate investment strategy in retirement?

As the debate about robo-advice gathers momentum, advisers can easily differentiate themselves from automated advice processes by showing they have specialist skills that are simply not possible to programme into a robot.

While I cannot offer any easy solutions, I hope I can help advisers develop and improve their skills so they are fully equipped to answer these important questions. In the next article I will look at future trends, including the outlook for annuities and new product development.

Billy Burrows is director of Retirement Intelligence



House of Commons to vote on FCA failings

MPs are set to debate the failings of the FCA, including its handling of the Connaught fund and missold interest rate hedging products, in a three-hour House of Commons session on 1 February 2016. Conservative MP for Aberconwy Guto Bebb will table the motion “this House believes that the Financial Conduct Authority in its current […]

Tracey McDermott FCA 700x450.jpg

FCA admits it will consider return to commission

FCA acting chief executive Tracey McDermott has admitted the Financial Advice Market Review may reintroduce some form of commission but claims the regulator will not reverse the RDR. Money Marketing revealed last week that the FAMR panel was considering radical reforms in a bid to boost access to advice, including lower qualifications and a return […]


The flip side of commission: Debate rages over risks of consumer detriment

Radical plans to re-introduce commission have split the industry as the FCA grapples with the question of how to encourage advisers to serve the mass market. Earlier this month, Money Marketing revealed the Financial Advice Market Review panel is considering a proposal to allow providers to pay commission to advisers, subject to strict safeguards to […]

Pru appoints UK chief exec

Prudential has appointed John Foley as chief executive of its UK and Europe business and made him an executive director of the group. Foley, who has held the role on an interim basis followed Tidjane Thiam’s departure in 2015, joined Prudential in 2000 as deputy group treasurer. He subsequently held positions including group treasurer, group […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm