“Cold is the main feature of this winter,” says forecaster WeatherWeb. Thanks for the heads up WeatherWeb.
Sometimes the insight offered doesn’t appear all that revelatory. But it’s always important to look beyond the headlines. As media becomes more fragmented and our level of information consumption skyrockets it’s easy to miss the subtext which can profoundly change the tone of the story and, most importantly, how we respond to it.
I talked last week about the increasing relevance of blended retirement portfolios and the need to move away from single standalone solutions for an increasing proportion of core advisory clients.
But hidden in the numbers is a dichotomy.
On the one hand, many of the pre-conditions for more holistic retirement solutions are in place – especially in terms of the advice infrastructure. Having recalibrated business models advisers recognise (and this is reflected in current practice) that it is imperative to look at a client’s entire portfolio when retirement planning, taking into account everything from tax issues to long term care requirements. Added to which, 100 per cent of advisers believe that estate planning (to minimise IHT) is important when planning income withdrawal strategy. As such, a number intend to implement a more structured approach.
But, moving from theory to practice, a different story is emerging. More than half (58 per cent) of advisers claim that less than 10 per cent of their clients use a combination of different retirement solutions presently. This propensity to opt for single product retirement solutions is all the more concerning when considering that more than a third (36 per cent) of their clients have assets of more than £500,000. For all the talk, it is surprising that so few advisers expect any significant acceleration in the use of blended solutions in the coming year – 64% expect no change.
The retirement landscape is changing to reflect increasingly fluid lifestyles and needs of a new generation of retirees, but these changes need to filter down to the advice which is given to clients. Advisers accept they will have to work harder to get their clients’ funds to do likewise and this will necessarily require the creation of more a tailored retirement solution. Better communication from providers regarding how (combinations of) solutions work and the risks associated with them will certainly help.
But perhaps the biggest challenge is the subtle but significant shift in behaviour required of advisers: from selecting the right solution, to combining the optimum blend of solutions and managing that mix over time.