The Great Pensions Debate – paraplanner report
22 June 2017
Caroline Stuart, head of Technical Solutions at DB Wood, attended the Great Pensions Debate this week. She provides her view of the event and her take-aways for Professional Paraplanner readers.
The Great Pensions Debate was exactly what it promised; excellent speakers who knew their stuff; attendees there to make sure clients get the right outcomes for their plans, and to maybe pick up a few tips and ideas on how to improve the way they do things.
It was an intense and jam-packed day and given the technical nature of the content, it could have easily lost some of the momentum as time went on. In fact it was just the opposite, with all of the speakers covering their topics thoroughly and in a very digestible way, and the debates becoming as heated as the day itself.
I learnt huge amounts, far too much to list, and I would encourage everyone to seek out some of the blogs and reports on the day, but there were a few key things that stuck in my brain:
1. Reviewing a DB Scheme is a planning issue – its not solely about the numbers.
• Whilst critical yields have historically played a fundamental part in the review process, they should not be the driving factor behind the advice – it is about the client’s Financial Plan and how this can best be achieved given their circumstances, needs and feelings.
• The DB Pension is part of a client’s overall picture, and we need to understand that picture before we can give appropriate advice.
2. The returns the client gets in the first few years of drawing benefits will impact on their ability to meet their goals and needs over their whole retirement.
• Sequence of returns is one of the most important things to be aware of with clients drawing benefits and stress testing needs to be built into any plan.
3. ‘People don’t make decisions on numbers, they make decisions on stories’.
• Be aware of status quo bias – not a particular fondness for a rock and roll band, but that people are generally happier keep things the way that they are rather than have to make a stressful or life changing decision.
• Information needs to be explained and presented to someone in a way that engages them and allows them to make their decision effectively – simply, tell them how the information fits into their personal story.
4. ‘The more you know, the more you know that you don’t know’.
• Many clients do not know what it is that they have, and often you will need to start by explaining what their pension actually is and offers.
• Some clients do not even see their final salary pensions as ‘their money’ and this can be a motivator to transfer when offered a large pot; establishing the client’s understanding is paramount.
• The more questions that you ask, the more questions you may need to ask!
The day was excellent and a big thank you to all those that made it happen. We are all very busy and so naturally you choose which events to go to very carefully, particularly where they are a whole day.
Will the benefits of going to this session outweigh having to take a full day out of the office? I can honestly say in the case of The Great Pensions Debate, the answer is a resounding yes.
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