Sheraton Financial Planning director on dabbling governments and the growing retirement funding gap
As an at-retirement specialist, Sheraton Financial Planning director Jason Eldrid works through the implications for clients every time the government decides to dabble in pensions.
But mindful governments can change every five years, which is hardly conducive to a long-term strategy, Eldrid is resigned to politicians tinkering with his area of expertise. While many breathed a sigh of relief that the Budget left pensions alone, the director does not worry about what governments may or may not do in future.
“We have to rely on politicians and people more intelligent than we are to make the right decisions,” he says with a hint of irony.
“But a lot of things about pensions don’t stack up. The state pension is triple-locked, and the country can’t afford it but the government wants to help the grey vote.”
Eldrid says many people want to retire in their early 60s but the state pension age has moved up to 66 or 67. They might have a couple of final salary schemes but with these increasingly following the state pension age in setting normal retirement age, clients risk being penalised if they take their benefits early.
“The big problem is funding the first five or six years of retirement and that gap is only going to get worse as the state pension continues to move out,” he says.
“Younger people don’t even have final salary schemes, so it is going to be harder and harder to retire around the age of 60.”
Working longer or lowering expectations of living standards in retirement may be the bitter pill many will have to swallow but, as Eldrid points out, the nature of retirement is changing anyway.
“We have lots of 60-year-olds who say they are retired but do consultancy or charitable work to earn some additional income, which helps,” he says.
Today’s pensioners need to make some crucial decisions due to pension freedoms. While Eldrid appreciates this has helped to keep him in a job, he recalls it was announced without warning by former chancellor George Osborne.
“With the continuing deficit and the NHS bill going up, it is amazing pension freedoms still exist. I wouldn’t be surprised if it was pulled or changed in some way. But it is keeping me in a job – and if the government always knew what it was doing, most advisers would not be required.”
Eldrid identifies with financial planning, as distinct from financial advice, having discovered lifestyle planning through Paul Armson’s Truth seminars some 10 years ago. Rather than make clients as much money as possible, he sees his role as to harness their finances to help them achieve what they want out of life.
2005-present: Director, Sheraton Financial Planning
1990-2004: Various roles, Scottish Equitable
1989-1990: Sales rep, Abbey Life
“We give people a licence to spend money. You’re only on this planet once and financial planning allows clients to make important decisions about things like changing jobs or buying a bigger boat.
“Often, they don’t have enough money, so hopefully you have enough time to get them over that line. In our initial meetings, we tell clients they do not have to bring all their bits of paper in; it’s about trying to nail down why they have picked up the phone to you or Googled advice at that precise moment.”
This is a world away from Eldrid’s early financial services career in sales at Abbey Life in the 1990s.
“I was licensed to sell endowments for mortgages and life cover. I had to do things like Christmas card drops, where you send Christmas cards to people and follow that up with a phone call,” he says.
Eldrid’s father, who ran his own business as a general insurance broker, advised him to become a life inspector – a role now known as a broker consultant. He followed that advice and worked in Reading for Scottish Equitable.
However, the regulator’s preoccupation with reducing costs and improving value for money for consumers meant the days of the branch networks were numbered.
After 14 years, Eldrid, who had been managing broker consultants, took redundancy. After meeting a few of his adviser contacts, he decided to become a financial planner.
“I saw about 10 advisers that knew what they were talking about and five or six of them mentioned financial planning, which didn’t really exist in the early 2000s as most were flogging products.
“They talked about cashflow modelling, fees-only and passive investments as the way forward and I thought ‘I’m going to do that’. Prestwood was the only financial planning software around at the time but it was priced around £1,000 a month and I couldn’t afford that.”
Eldrid set up his own business in 2005, joining Positive Solutions initially but becoming directly authorised after four years. He then met another adviser who appeared to be doing the same thing as him. “I went into partnership with him but did it on a handshake and went into his business,” he says. However, things didn’t work out and Eldrid had to start again from scratch.
What is the best bit of advice you’ve received in your career?
If you put nothing in, you will get nothing out.
What keeps you awake at night?
My ongoing to-do list – but generally I’m good at parking stuff and getting a good night’s sleep.
What has had the most significant impact on financial advice in the last year?
Brexit, which is still a dog’s dinner. In fact, it is even worse than a dog’s dinner.
If I was in charge of the FCA for a day I would…?
Have a day off. I would want to make the volume of paperwork easier for clients but I don’t think it can be.
Any advice for new advisers?
Listen to your peers and your clients. Listen to what their needs are, rather than what you think their needs are.
“I lost my income and I lost a lot of clients I had at the time. So I worked from home to build the business back up. I’m now slightly ahead of where I was then. Earlier this year, I moved back into an office and have just taken on a graduate as a paraplanner/administrator,” he says.
Eldrid believes we are in a golden age for advice firms who offer clients planning rather than selling products, who are competitive on price and who have the right technology. That said, he concedes the potential to make a lot of money will always attract people into the business for the wrong reasons.
“I was chatting to a client recently and he said he knew three or four people in their late 50s and early 60s at his golf club who have set themselves up as advisers as they want to get involved in pensions transfers. People with a half-intelligent brain think ‘let us go and get a piece of that’.
“When we did a pension transfer recently, we were in competition with another IFA that was going to charge £60,000 – just for signing a form and a bit of advice.
“Bad stuff still goes on, and it always will where there are large amounts of money involved.”