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The retirement journey and the value of advice

3 April 2019

 The retirement journey and the value of advice


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When undertaking DIY at home, some say that the amateur should plan on their project taking twice as much time and three times as much money as the original estimate. The reason? DIYers make mistakes.

The FCA has highlighted a similar principle in behaviour when people are retiring. In the Retirement Outcome Review, Final Report (MS16/1.3) the differences in outcomes between those who were retiring when ‘doing it themselves’ and those who were taking advice was stark.

Three key areas of concern for retirement DIYers

1. More than 60% of consumers not taking advice were not sure or only had a broad idea of where their money was invested.
2. Consumers holding savings in cash could get an income from their pot up to 37% higher over 20 years by moving to a mix of assets.
3. Some consumers could increase their income from their pot by up to 13% by switching to providers with lower charges.

A big opportunity exists for advisers to demonstrate the value of their advice

Creating a retirement plan is one of the most important things you can do for your clients. This plan needs to evolve over time and should never be a one-off. But how can you quantify this and bring to life the difference in outcomes between a retirement DIYer and an advised client?

Fortunately help is at hand. At Old Mutual Wealth we have a client facing case study that demonstrates the value of retirement advice. This case study involves Mike, his wife Emma, and their two grown up children. Mike is about to retire and the case study compares the situation between Mike’s DIY approach and the situation where Mike has involved a financial adviser. With a defined contribution pension fund of £500,000, the case study demonstrates that after five years and following financial advice, Mike has:

• pension savings worth £23,728 more
• saved £13,595 in income tax
• protected £140,031 from inheritance tax
• received a £100,000 critical illness pay-out, covering the additional £6,840 a year cost of living with cancer and protecting his retirement fund.

The full details of the case study can be found here.

The size of the pensions and retirement market is massive

By being able to demonstrate the value of your advice, you will be able to take full advantage of an evolving market where 34 million people are saving for retirement or later life. They all have a need to convert these savings into retirement income. With the decline in defined benefit pension savings, many will rely on defined contribution pensions as a major source of retirement income over the medium to long term alongside their state pension and any property wealth or savings.

It’s a great time to be an adviser!

Ian Browne

Pensions Expert, Old Mutual Wealth (part of Quilter)



The value of your client’s investments may fall as well as rise and they may not get back what they put in. Please be aware that calls and electronic communications may be recorded for monitoring, regulatory and training purposes and records are available for at least five years.

Old Mutual Wealth Life & Pensions Limited is registered in England & Wales under number 4163431. Registered Office at Old Mutual House, Portland Terrace, Southampton SO14 7EJ, United Kingdom. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services register number 207977. VAT number 386 1301 59.

218-1876 April 2019

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