Advisers must build financial plans which are flexible enough to adapt to any eventuality as clients battle a ‘perfect storm’ of rising inflation, high social care costs and a soaring cost of living, says Ingenious.
With inflation at its highest point in more than 30 years, savings and income are being eroded at an unprecedented rate at a time when most tax allowances and thresholds have been frozen, adding to the squeeze.
According to Simon Harryman, senior business development director at Ingenious, the cost of care provision will continue to remain “eye wateringly” high and will remain so despite the forthcoming care cap.
Harryman says: “A perfect storm of rising costs and poor returns is hitting middle England, a group that is already being squeezed due to changes in age and gender related demographics and lifestyle.
“Rising costs, paired with eroding savings mean that care provision could become even less affordable for many and this will inevitably mean that many middle-aged workers will be forced to provide care for their elderly relatives whilst still working and likely still providing a home for their children who are unable to get on the housing ladder.”
Harryman says the wealthy frequently escape these crises as they have sufficient resources and access to professional support and guidance, while those with little in savings or assets are also not likely to feel the full effects of these challenges as they are often supported by the state.
In contrast, those in the middle are most likely to have to adapt the most by making changes and replan their finances. Given the challenges they face, Ingenious believes advisers need to create flexible plans and research processes and panels need to be updated more regularly to ensure that solutions can meet the changing needs of clients and reflect changes made by product manufacturers.
In addition, recommendations should be supported by facts rather than opinions and advisers should not be afraid to instigate discussions amongst families which are often difficult to get started.
Meanwhile, product providers and investment managers also need to build flexibility into the product design to allow for changes in circumstance and ensure that costs are managed responsibly so product changes are appropriate and minimised where possible.
Harryman adds: “Never has there been a time when clients have needed their advisers more. Advisers have a vital role to play by making sure they understand the pressures their clients are facing, how those might change and what solutions are available to help them by staying on top of developments and working proactively with product providers to fully understand how they can support them now and into the future.”
[Main image: richard-horvath-cPccYbPrF-A-unsplash]
