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Giving advice on retirement advice is not plain sailing

You were kind enough to publish a comment that I made concerning Sofa and


chartered status some time ago, particularly with reference to what is


perceived as professionalism in our industry.


I was interested to see the retirement income case study for your awards


competition run in association with Sofa and I think this illustrates the


point I was trying to make.


I refer in particular to the mention of a new boat for £40,000 and the


intention to pass the summer cruising the Mediterranean. Now, I know that


the question-setters will merely say this is a theoretical case study. But


we don&#39t deal with theoretical people, nor with theoretical money, and


therefore I think that anything that is put in a question ought to be


looked at as fair game.


The sum of £40,000 would buy you at best a new 30ft sailing boat. If you


wanted a motor, you wouldn&#39t be able to have a seagoing vessel at all, just


a river cruiser, for that sort of money. However, £5,000 would buy you six


weeks&#39 hire of the same 30ft vessel in the Mediterranean.


If the argument is: “Ah, but he hasn&#39t got a boat at the end of the


period,” then £10,000 would buy him an inshore dinghy which he could enjoy


for sailing weekends, thus saving at least £25,000.


It is widely accepted that boats are a black hole down which money disappears.


The other parts of the question concerning phased vesting, retirement


income drawdown and annuities are, of course, subjects which will be


wrestled with by the entrants to the competition.


My point is that financial planning should be approached holistically and


facts such as those presented by the question-setter should not be


overlooked or glossed over merely to set up the question in a satisfactory


way.


To say they are looking to see how entrants would tackle the question of


the various pension options is all very well but, as you can see, there may


be more money to be saved by looking at a side-issue than there might be in


addressing the main question.


Not to offer the client an opinion would be, at best, dilatory and, at


worst, a dereliction of duty of care. Could this be regarded as


professionalism?



Harry Katz


Norwest Consultants,


Stanmore,


Middlesex

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