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Key elements to better retirement outcomes
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August 2020
Better retirement outcomes are more important than ever
The map for a better
retirement
Five years on, the sheer shock of the pension freedoms is still being felt across the advice profession. The government pulled a very rapid trigger on a landmark reform that would change the face of retirement advice for years to come. The challenges are obvious. Clients are living longer. They are living healthier for longer. Returns on bonds and annuities aren't what they were. Regulation has tightened requirements to really know your client bank is getting the right products, and that their status is properly reviewed on a regular basis. Planning for a completely uncertain future is a minefield for advisers, even as tools like cashflow modelling grow in sophistication. A one-size-fits all, static withdrawal right might no longer cut it. How are advisers meeting this retirement planning challenge? Will the rise of centralised investment propositions, and indeed centralised retirement propositions, allow you to provide better outcomes for your clients? What's the best way to produce income, hit on the right withdrawal strategy, ensure basic needs are covered, and make sure calculations of capacity for loss and spending are done robustly? To help with these challenges, Money Marketing have teamed up with Just to offer you a series of 6 webinars each providing specific learning outcomes for the challenge of securing better retirement outcomes for your clients. Simply click on the modules below, register your details and collect 30 minutes of CPD to boot. We hope they will help you travel even further on what is already a mammoth journey of discovery.
Introduction by Justin Cash - Editor, Money Marketing
Capacity for loss and spending hierarchy
Approaches to producing the income
Stress testing and scenario planning
Withdrawal policies
The Review Process
Key elements to better
In these sessions, we’ll be sharing 6 key steps in the advice process. These represent the main areas that can help you to demonstrate that your clients’ needs, goals and aspirations have been clearly planned for. And we’ll take into account all of the various scenarios and risks that are associated with the retirement journey.
retirement outcomes
Home
Capacity for loss and
In our second video, we will look at how you can help clients to put first things first when it comes to future spending patterns. There has been some debate around the importance of capacity for loss, particularly in retirement. But one thing is clear; when it comes to retirement dreams and aspirations, it is imperative to look at the ‘non-negotiable’ aspects of income needs at outset – and how these might change. Establishing this amount may not be too complex in many cases, but perhaps it’s simply more a common-sense approach of putting first things first. Here we will look at how you can help clients to take a realistic view of what their retirement needs are and we’ll be asking Rory Percival for some key points on how to look at this area objectively. We’ll then look at establishing a hierarchy of needs and the ort of questions to get us there.
spending hierarchy
By viewing this webinar, you will be able to:
Learning Objectives:
Recognise the importance of capacity for loss Understand how capacity for loss differs from attitude to risk Develop a process for establishing a spending hierarchy Understand the impact of behavioural biases in the early stages of advice Establish an objective approach to retirement planning Recognise the role of secure and flexible income
Approaches to producing
the income
What is the right approach given the client circumstances - going back to PROD, of course. How do you provide evidence to support an investment-based plan or a safety-first strategy. Or maybe a combination of both. How do you manage a guaranteed income alongside an investment?
Recognise the main methods of using investments to produce an income Discuss the impact of the variable assumptions that can be applied Recognise the investment challenges that may exist Discuss the challenges of sequence risk and volatility Understand the relevance of guaranteed income in an overall retirement plan
Stress testing and
scenario planning
We will look at things like cash-flow planning. We’ll see how different tools can be used to help stress-test different scenarios. In what circumstances would the plan not work? How can we look at things objectively and overcome behavioural biases that might exist. We need to take a realistic approach. The use of planning tools along with the expertise of the adviser can really manage expectations and set a course for a better retirement and later life. We’ll also see how the use of different assets and product mixes might improve outcomes whilst still allowing a degree of flexibility.
Learn how to stress-test a retirement scenario Examine the wider impact of behavioural biases Discuss ways of applying an objective view of retirement income planning Explore the options for clients, should the income requirement be shown to be breached Understand the role of cash-flow planning Explore the availability of other planning tools that may assist in the advice process
Withdrawal
policies
What happens if things don’t go to plan? How do withdrawals change? What is the contingency plan? Do we need to look at other assets? Has this plan been agreed with the client at outset? In an i deal world, everything will go to plan, and maybe the client will be able to achieve more than they expected. But a withdrawal policy statement is deigned to demonstrate that they have understood that there are variables that may have an impact. They may need to agree to maintain or reduce withdrawals in certain circumstances. Or, of course, they may have an opportunity increase income if things have gone well, rather than continue on the path originally set out.
Recognise how to evidence the key stages of the plan Put in place agreed contingency arrangements depending on changing circumstances Discuss the impact of an economic downturn and the relevance of financial resilience Agree and document planned increases and decreases in income Discuss what a withdrawal policy should contain Recognise where the use of non-pensions assets might be appropriate
The review
process
What should a client review look like? Here we’ll take you through a number of ideas as well as industry guidance to show how to review a client’s on a regular basis. Here, we’ll take you through a process and emphasise the key regulatory points that firms need to make sure are covered. Ultimately, it’s all about good client outcomes. The same focus that was placed on the initial advic e should be given to reviewing the plan and reassessing the objectives. There are a number of key areas to explore here. Planning for retirement and into later life goes further than just the financial elements and includes considering ‘non-pension’ areas such as the need for care and the appointment of attorneys. The regulator also expects firms to have a consumer vulnerability policy in place. Whilst vulnerability isn’t limited to those in later life, research shows that there tend to be some elements that present themselves more as people get older. So there is a lot to factor in.
Examine the key factors in a review process Discuss key industry guidance on good practice relating to pension reviews Understand the regulatory principles pertaining to pension reviews Recognise the impact of health and ageing Examine the key facets of a consumer vulnerability policy Understand the need to review the advice process
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A secure lifetime
income
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A secure lifetime income
Chapters
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The key elements to better retirement outcomes
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Better retirement outcomes are
Five years on, the sheer shock of the pension freedoms is still being felt across the advice profession. The government pulled a very rapid trigger on a landmark reform that would change the face of retirement advice for years to come. The challenges are obvious. Clients are living longer. They are living healthier for longer. Returns on bonds and annuities aren't what they were. Regulation has tightened requirements to really know your client bank is getting the right products, and that their status is properly reviewed on a regular basis. Planning for a completely uncertain future is a minefield for advisers, even as tools like cashflow modelling grow in sophistication. A one-size-fits all, static withdrawal right might no longer cut it. In this supplement, we explore how advisers are meeting this retirement planning challenge. Will the rise of centralised investment propositions, and indeed centralised retirement propositions, allow them to provide better outcomes for clients? What's the best way to produce income, hit on the right withdrawal strategy, ensure basic needs are covered, and make sure calculations of capacity for loss and spending are done robustly? As well as our own research with advisers, we've teamed up with Just to offer a host of webinars taking a deep dive into the keys to securing better retirement outcomes for your clients. We hope they will help advisers come even further on what is already a mammoth journey of discovery.
more important than ever
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The review process
