Advisers urged to develop at retirement offering

Nia Williams

November 26, 2010

This is according to the Association of Independent Financial Advisers (AIFA) and Prudential UK which have launched a ‘Financial Planning Through Retirement Benchmarking Study’. The study builds on previous work to understand how advisers do business with consumers at retirement and to identify ways in which this market can be further developed.

The study found:

  • 30% of IFA clients either planning to retire in the next two years or in partial retirement
  • But few IFA firms have a specific offering for the at retirement market with current service propositions largely mirroring those for the asset accumulation stage
  • 70% of advisers report an increase in the use of enhanced/impaired annuities
  • 39% of advisers predict growth in variable annuities over the next three years
  • There is a 22% increase in the number of those reaching the milestone between 2011 and 2012 alone as the baby boomer generation hits retirement. This presents a huge challenge and opportunity for the advice profession.

Andrew Strange, director of policy at AIFA, said: “At retirement is a distinct market with unique characteristics. Consumer needs are different and often more complex than at other stages of life. The decisions that consumers make at this time are vital and have long term implications for their future wellbeing.

“Four out of ten clients at retirement are new to adviser firms, which presents a significant opportunity to attract new clients. Firms should prepare now for arguably one of the biggest opportunities in financial advice.”

Barry O’Dwyer, deputy chief executive at Prudential UK, added: “The importance of good advice and the role that advisers play in helping people to secure a comfortable retirement is pretty hard to overstate. We remain supportive of firms who are showing increasing transparency on fees and therefore making it easier for consumers to understand the value of financial advice. “

The report highlights some opportunities for adviser firms to enhance their at retirement proposition. For example:

  • Commence discussions around future income requirements and funding at an earlier stage
  • Introduce a ‘count down’ to retirement approach for clients
  • Broaden the discussion to include areas that are not always covered, such as state benefits
  • Signpost potential future requirements, including those that are less palatable for the client to discuss in the earlier stages of retirement, such as equity release and long term care

Andrew added: “Retirement will, for most, be a 20 year journey, not a single event, and many consumers will need access to advice throughout. IFAs are well placed to provide this.There is understandably some level of discomfort in discussing difficult issues such as health and long term care issues. But this is key to developing a long term relationship through retirement rather than one that begins and ends at the purchase of an annuity.”

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