Later life planning offers a growing target market for advice businesses. But how can you position yourself to ensure you can offer that market the best retirement advice? John Somerville looks at how advisers and paraplanners can develop their skills and knowledge to help advance their career and secure the future of their business.
Why improve your retirement advice skills
The UK has an ageing population with a growing number of people approaching retirement. And yet, according to the Money & Pensions Advice Service, 69% of those aged 50 to 70 leave retirement planning to the last minute.
This is an expanding market of people approaching retirement who have individual needs and financial ambitions. They need guidance on the various options, which requires a sophisticated level of advice. Many of them have adult children who are starting to consider their own financial planning, including looking ahead to retirement.
At the same time, later-life planning has becoming increasingly complex because:
• fewer people have access to defined benefit schemes
• people don’t retire at a set date anymore
• many people have several income streams after retirement, which may or may not include income from a pension annuity
• the income provided by traditional pension annuities has fallen
• lifestyle choices and financial goals continue to evolve in retirement
• life expectancy – and therefore the need to plan for long-term care – has grown
• legislation is ever changing.
How has retirement planning changed?
The Covid-19 pandemic has forced many people to reassess their finances and their retirement plans. Some have lost value in their pension pots because of fluctuating markets. Life in lockdown has prompted others have to adjust their priorities, for example, move nearer to family or retire earlier.
Traditionally, you’d retire in your sixties and live off income from your pension annuity for the rest of your life. Now you might retire early or late, work part-time in retirement or have some other income to add to your pension.
Your clients may plan to travel when they retire, or devote more time to interests, hobbies and unfulfilled creative ambitions which require a decent income. However, after an active period in early retirement, people tend to become less active and their costs usually fall.
Another factor to consider is increasing life expectancy. Longevity means that a retirement plan needs to be reviewed and updated as needs and financial goals change. Your clients need to plan for the possibility of requiring long-term care.
And increasingly, older people want to pass on wealth to their children and other loved ones before death – either to help them get on the property ladder or just to witness them enjoy it. That means reviewing and updating financial goals after retirement.
Skills for advising on retirement and pensions
Because later life planning has become more complex, you need to take a holistic approach to retirement planning – using cashflow modelling and encompassing all your clients’ potential revenue streams and assets.
To do that well, you need to able to ask difficult questions, for example about long-term care and funeral planning.
Is there a qualification for retirement planning?
You’re not required to have an additional qualification, but this is a specialist area requiring specific skills and knowledge.
Our new Level 6 Financial Planning in Retirement (FPIR) is a practical course that will teach you how to take a holistic approach to later life planning. It will help you learn how to ask your clients the right questions and use cashflow modelling to review their options.
You can complete the FPIR in as little as five months, although you’ll have a year to finish it from when you register.
When you’ve passed FPIR, the designation after your name will show you have the expertise to provide the best service for your clients. And it will highlight your professional credibility to peers and networks.
You can also use FPIR as the specialist unit option towards the Advanced Diploma in Financial Advice (Adv DipFA), which leads to chartered status.
