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What advisers are saying: The perfect retirement blend

Phil Wickenden Technical Area 200

Sharing my thoughts at the Henry Stewart ‘Retirement Options’ conference last week I found myself, two minutes in, highlighting the need for greater use of blended annuity portfolios with reference to the Dr Seuss creation ‘The Lorax.’

You know, the fuzzy little orange fellow? No, you probably don’t know and so you see my faux pas. In the moment, (admittedly skewed) logic convinced me that the difficulties I face at this time of year shopping for a pair of gloves that fit was the perfect illustration of the perils of a one-size-fits-all approach. The Lorax comes into it, I relayed to a rightfully bemused group of industry stalwarts (Billy Burrow’s brow was especially furrowed), on account of his long wispy fingers that my ill-fittingly be-gloved hands vaguely resemble when trying on said winter accessory.

Hopefully the above a) goes some way to explaining to those present what on earth I was poorly driving at and b) rather highlights the decumulation dilemma many advisers face – that there is a difference between, on the one hand, intellectually grasping the facets of an increasingly complex suite of retirement solutions and, on the other, explaining them in a way that speaks directly to the audience’s circumstances and in a context they can relate to.

The use of single stand alone solutions for most (core advisory) clients’ retirement needs won’t cut the mustard. But, while this is an increasingly accepted view across the industry, it is yet to fully filter through to adviser behaviour. Macro and micro market conditions point strongly to a greater need for blended solutions:

  • Annuity rates will remain constrained;

  • Advisers’ core client base is older and wealthier, with increasingly diverse retirement needs (from IHT planning to long term care);

  • Consumer lives are becoming far more fluid.

All of which means retirement planning should be far less linear than ever before. But our research shows how there is a difference in the holistic financial planning models we purport to have and the old single solution predilection that remains the reality.

Advisers certainly tell us that clients require greater flexibility, or rather a widened approach to their portfolio planning, but at the moment use of blended solutions is limited, with over half of advisers having used blended solutions for less than 10 per cent of their vested pensions clients.

Next week I’ll explore this dichotomy further without the help of Dr Seuss.

Phil Wickenden is managing director of So Here’s The Plan

Phil Wickenden 1810


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