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Work ethic

Advisers need to adjust how they frame their advice for individuals who aim to continue working beyond retirement

Being an (ageing) SME owner myself, I have been drawn to three recent articles on the subject of retirement. The basic premise of the articles was the apparent trend for SME owners, entrepreneurs and high-net-worth individuals to have a stated or unstated retirement strategy that is, well, not founded on retirement.

These individuals, in increasing numbers, apparently intend to just continue working. Not necessarily because they have to, no, because they choose to. They enjoy what they do. The subtext is they also believe that remaining engaged and vital would be beneficial for their health – their physical wellbeing. Continuing to work, and presumably generating an income, would also, of course, do no harm to their financial wellbeing in these times of uncertain and generally harder to achieve acceptable financial returns.

Of course, there are increa-sing numbers not in the highnet-worth/entrepreneur/SME owner category who are looking at a future that will have to include a delayed retirement. The scrapping of the default retirement age of 65 next year is a further remin-der that what retirement means to many is going to change – because it has to by virtue of economic reality, not choice.

A recently published piece of research by Barclays Wealth provided some extremely interesting insights into the retirement plans of million-aires. Here are some of the highlights. Sixty per cent of British millionaires say they plan never to retire. They are shunning traditional retirement and instead continuing to work, start businesses and take on new projects in their later years.

A total of 1.4 million people are now working beyond the state pension age. This is now the fastest-growing section of the workforce – 12.4 per cent of that age group are in jobs, up from 8 per cent in just a decade – and is likely to be given a further boost when the Government scraps the default retirement age of 65 next year.

Most people though (millionaires and SME owners excepted, of course) think of working for an extra two or three years, not until they die.

It is not just entrepreneurs, though, with their drive and work ethic, who want to go on and on. Those who have inherited their wealth also appear reluctant to forgo the buzz of work, with 57 per cent saying they have no plans to stop. I was, however, reminded of the inherent drive of entrepreneurs when watching the recent When Piers Met Lord Alan TV prog-ramme. Lord Sugar appears to be the consummate entrepreneur and his wife is obviously extremely balanced and perceptive, given that she described the experience of owning Tottenham Hotspur as a horrible and thoroughly depressing experience.

It would seem that the UK is leading developed countries in this trend of delaying (in some cases, indefinitely) retirement, according to the Barclays Wealth survey

That I was watching this show also reaffirmed to me that my TV viewing habits are definitely on the decline. This view is reinforced by the fact that before this programme I had spent a pleasant couple of hours deeply engaged in the exploits of a number of (largely) talented would-be millionaires trying to suffic-iently impress the judges and their “friends” in their “homes” around the world. And if you were doing what Louis, Simon, Cheryl and Danni were doing and getting paid what they are being paid, would you be seriously thinking about retirement?

Anyway, to return to the main point of this article, it would seem that the UK is leading developed countries in this trend of delaying (in some cases, indefinitely) retirement. According to the Barclays Wealth survey, which polled 414 people in Britain with at least £1m in investable assets and 2,000 worldwide, 54 per cent of respondents express a desire to carry on working but in Switzerland the figure is 34 per cent, in Spain 44 per cent and Japan 46 per cent. You will emember that the UK figure was 60 per cent.

Coincidentally, some anec-dotal back-up to these findings was given in the FT which reported the Barclays Wealth findings in the life and arts section. Here, Harry Eyres refers to his father, who is aged 84 but who is still very active in the wine business because he loves it (and) because he finds it interesting and stimulating. He also quotes 80-year-old restaurateur Gualtiero Marchesi who turns up for work at his restaurant near Lake Iseo every day and also regularly shows up at his Milan establishment in La Scala.

Luke Johnson, who pens the excellent (in my opinion) The Entrepreneur section of business life in the FT every Wednesday (well worth following) also looked at this phenomenon. Among many examples he quotes is John Kluge, the billionaire who recently died at the age of 95.

Apparently, Kluge said: “I love the work because it taxes your mind. Years ago, I could have taken a few million dollars and joined the country club and gotten into a pattern of complaining about the world and tax law.” Luke goes on to give more intriguing examples.

Right or wrong, this is a phenomenon that advisers to the SME-owner segment need to be conscious of when framing their advice offering to them. Their approaches and their engagements need to be sensitive to this possibility. That is not to say that all entrepreneurs/millionaires will have a “work ’til I drop” mentality but they should be ready for quite a few who might. But that is not to say that there is no scope for giving financial advice or for appropriate financial products that are sensitive to the risks that even these clients will be carrying.

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