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The long view of advice

Living Time’s Dave Harris says advisers need to position themselves now to secure a slice of the lucrative retirement sector. By Gregor Watt

Harris: ‘Already, competition is heating up as providers and annuity desks ramp up for increased transactionbased business’

There are many opportunities for advisers to grow their businesses but Living Time managing director of sales and mark-eting Dave Harris says that drawdown offers IFAs real opportunities.

Harris says: “IFAs have switched on to the need to create value in their business by gathering assets under management and focusing on building recurring revenue streams. It is goodbye transactional trading and hello to a new era of retainers, fees and regular servicing of active clients.”

But while the RDR is encouraging IFAs to look at investment with an eye to growing their business, very few have considered the post-retirement business.

He says: “The glaring exception is retirement business where the one-off transactional business of flogging lifetime annuities continues to dominate. As opportunities go, the retirement income market is just too big for IFAs to ignore. A wave of pension money is on its way from the growing number of retiring baby boomers. This market is expected to grow from £14bn now to around £23bn by the end of 2013. The Financial Services Consumer Panel foresees it quadrupling over the next 10-15 years.”

But Harris says the market is changing quickly and advisers need to be quick to take advantage of this opportunity.

“Already, competition is heating up as providers and annuity desks ramp up for increased transaction-based business. To grab a share of the action, forward-thinking advisers need to be positioning themselves to cherrypick the most lucrative clients while retaining some revenue generation potential from the rest.”

According to Harris, this means not just advising at the point of retirement but continuing past age 65. Harris: ’Already, competition is heating up as providers and annuity desks ramp up for increased transaction-based business’

“This means focusing not just on the ’at’ but also the ’in’ retirement business. This is pretty obvious for the natural income-drawdown client, the Bentley driver. But due to the changing needs of retirees and a new breed of modern retirement solutions available, this can equally apply to Mercedes and many Mondeo drivers too.”

The state of the retirement market will give IFAs plenty to get their teeth into when it comes to advising this market.

Harris says: “Once upon a time, annuity returns were reasonable, retirement was relatively short and there was little other choice. Now annuity rates are near historic lows for healthy individuals and retirement is longer than ever before. And the economic situation is not helping – would you want to lock into what 2010 has to offer?

“Given the choice of income security or flexibility, many of those reaching retirement would probably ask for a bit of both. This presents IFA businesses with an opportunity they would be mad to refuse, the chance to show their expertise and to keep relationships with clients going by providing a great service not just at but deep into retirement.”

The RDR is forcing many IFAs to consider segmenting their clients and offering a tiered system of advice for investment and saving clients.

Harris says a similar tiered option for post-retirement business can offer ongoing business for advisers while giving clients assistance in dealing with their changing needs in retirement.

Harris says: “This does not even have to be on a fully advised basis but it does haveto engage with the target audience by outlining a range of options and strategies to deal with changes through the retirement years. Offering a cocktail of solutions and flexible strategies is one way to keep more assets under your control, helping clients deal with changing circumstances and helping you with your cashflow and long-term business value.”


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