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Graham Bentley: Why the industry has got it all wrong on retirees

Not everyone wants to conform to a prescribed, industry-standard retirement

As I look forward to my first £802 per month pension payment later in the year (already earmarked as a not-unwelcome contribution to the school fees pot), I am reminded I may not be the typical retiree.

However, I am in turn amused and irritated by the commentary surrounding retirement planning; in particular from those claiming copyright on “good retirement advice” and its associated processes.

This almost puritan quest for the standardisation of retirement planning reflects two disturbing industry tenets: ideas unsupported by historic data are unreliable and tools like cashflow planning are essential instruments.

While the pantheon of financial planning celebrities opines on retirement planning “dos and don’ts”, the most important wisdom – understanding the behaviours and aspirations of retirees – has been reduced to a stereotype. For some, unfortunately, the fun seems to be in the analysis and debate, rather than the advice and the outcome.

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Sermonising on cashflow modelling, sequence risk and sustainable withdrawal rates echoes that contention. Much of what passes as “academic research” on these subjects is at best subjective scenario analysis and, at worst, pseudo-science, both testing outcomes against a historic market dataset.

Indeed, the conclusions drawn are given gravitas by sleight-of-hand, since the data is borrowed heavily from US sources which, in turn, have selectively reprocessed or regurgitated US studies of varying shades of authority that bear little relation to the UK experience.

You can calculate the probability of rolling a double six with dice but not the sustainability of a withdrawal rate. However powerful the analysis tools, solutions are being proposed for a model client that bears little resemblance to a real one.

Perhaps the most insidious aspect of current retirement planning is the stereotyping evidenced in conversations about retirees. In a survey of advisers, nearly half advise clients under the age of 40 and think younger clients prefer advisers of a similar age because they can relate to their circumstances. The corollary of this is that younger advisers cannot relate to retirees, who must have very different behaviours to their younger clients.

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In 2006, during the launch of Selestia’s innovative Collective Retirement Account, I coined the acronym BIFs for people “Born in the Fifties”, raised in a period of cultural and political upheaval, and who have been well-served by asset growth over 40 years.

The unique set of circumstances that produced that reward (the discount rate falling from 35 per cent to zero, for example) is rather less likely to be repeated over the next few decades. BIFs may not appreciate being patted on the head and herded into the corral marked “allotment”. They have the life to enjoy that they would have aged 25, had they the wherewithal.

Indeed, Standard Life’s Death of Retirement report confirms that negative stereotypes about what it is like to be old persist among the young, while the antithesis is more likely to be true.

Psychologist Honey Langcaster-James declares: “This is the life stage when you will be happiest, likely to be in an established relationship, financially secure and most importantly, clear in the direction of your life… Ironically, the lifestyle age of an over 55 is closer to one that those under 25 are perceived to lead”. I concur wholeheartedly.

The issue is sustainability of personal and family fulfilment, not necessarily income withdrawals. It is a philosophical, rather than statistical issue.

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This is where I believe qualified life coaches like Chris Budd have rather more to offer the advice community than manipulation of tax rules, tools and software, potentially becoming the catalysts for better relationships between advisers, younger and older, and their retiree clients. Being able to leave your biases and prejudices outside the client meeting room requires unusual self-control, and almost certainly remarkable listening and body language processing skills.

Asking clients leading questions based on the need to whip out the cashflow modelling software or the latest asset allocation tool seems to be a constraining feature of the modern advice process.

Media guru Marshall McLuhan recognised this in the 1960s when he warned that we build tools and then the tools shape us. We were becoming slaves to our support systems.

In advisers’ case, this translates as back office, asset allocation tools, outsourcing, platform selection, but perhaps most of all the “robust, repeatable” processes that encourage advice by conveyor-belt. Their limitations shape advisers’ behaviour, rather than advisers selecting behaviours, and adding infrastructure to support those behaviours.

BIFs are better prepared psychologically to do what they want in their golden years, but may need “Have you thought about…?” guidance.

A generation ago, when your hips and knees went, it was a life changing event. Today, you get yourself a new set and ski the Vallée Blanche (again). BIFs are less likely to think of themselves as seniors; being called Grandad is not what I envisioned the last time I danced at Wigan Casino. And they are less likely to stop playing contact sports after their third knee operation (I stopped playing football aged 62).

As Number 6 in “The Prisoner” declared 50 years ago: “I am not a number!”. Much as the powers that be might imagine our delight in being confined to an Italianate village on the south coast, not all of us want to conform to a prescribed, industry-standard retirement. Retirement planning should be more about behaviours in retirement and less about the solution that funds it.

Fit solutions to retirees, and not vice versa.

Graham Bentley is managing director of gbi2



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There are 12 comments at the moment, we would love to hear your opinion too.

  1. Couldnt agree more Graham-as a IFA who is active in this market, and a BIF,we should never lose sight of the fact we are dealing with real people.
    Dont let the tail wag the dog!

  2. Graham makes some good points (as usual), but any generalisation is going to be found wanting. Those planners that I know, never give the impression of slavish subservience to tools, if anything, they use tools to convey the point that its an educated guess that needs regularly reviewing, because rea life isnt linear and **** happens.

    Many of my retired clients have “never been busier” yet for the many that are not BIFs, however you want to categorise them, “retirement” seems a long way off and something they dont relate to. I dont even like using the term, its just the point at which you can choose to work if you want to.

  3. Wow – what a great article

    My spin is that everybody has an individual retirement journey and there are two things happening:

    1 – a lot of technical stuff
    2 – a lot of behavioural stuff

    I agree with Graham that it is easy to be a slave to the technical stuff without paying enough regard to the more personal side of retirement planning


  4. I wonder; is there a link between receiving your first pension payment and becoming grumpy?

    I totally agree with the last sentence of the article. Yet many people seem to think that “Robo-advice” is the future.

    By the way, here’s a bit of (free) advice for BIFs: never trust anyone who says their name is “Honey”.

  5. I’m pseudo psychologically schizophrenic about this article.

    Everyone needs to be treated in terms of their needs, objectives and preferences. The various tools and research that Graham refers to are useful but the two gifts I really want are benefit of hindsight and a crystal ball.

    I can prove on a spreadsheet that it will on average, take an average driver, on an average day approximately 2 hours to drive from my home in West Lancashire to my father’s home in York. However I’ve done it in 1hour and 10 but also it’s taken me over 5 hours. Same driver, same car(ish) same journey.

    The variables are important but so too is the map (or satnav) and that’s all the tools are in financial planning. Useful but will never replace experience or more importantly, a structured review to compare what one thinks will happen with what actually does.

    The alternatives without the evasive pesky crystal ball and hindsight thingy are really as good as sticking your finger in the air, seeing which way the wind is blowing that day and hoping for the best.

    in the meantime, what about Boris’s bridge over the channel idea? On budget or eventually coming in at about ten times the projection, if ever?

    • I totally agree with you Duncan. Tools and frameworks are there to help inform and manage expectations all round, not to be a straightjacket that confines the client’s objectives or the ‘art’ of advising. Arguably, every art is improved by the application of a little science, because science creates awareness and it’s only when someone is aware that they can hone their skills.

  6. Should have added that I’m a BISs and further to James’ comment would agree that Robo ‘advice’ relies entirely on all the things that Graham seems to view as of little use. QED!

  7. I don’t think I can claim to be a typical retiree. I took and passed AF7 in October at the grand age of 69, four years since I got my State Pension and 47 years since taking my first CII exam.

  8. Everybody is correct, retirement is a journey. So resources, planning, regular reviews of where you are and professional advice are what can make a retirement joutrney, enjoyable, comfortable and tax efficient.

    Well said everybody, each to his own so long as the Clients have the correct outcomes.

    “Efficiency is doing things right; effectiveness is doing the right things.”
    – Peter Drucker

  9. Oh, and I’m a BIFo

  10. All well and good if an IFA is affordable to the masses but they are not. You have to find a solution that will allow access to advice for people that are not certain what to do and for who IFA’s are unaffordable. This article is great for the few but not for the many.

  11. Let’s not forget the prelude to Number Six’s generation-spanning, libertarian rallying cry.

    “I will not make any deals with you … I will not be pushed, filed, stamped, indexed, briefed, debriefed or numbered. My life is my own.”

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