According to independent financial research company, the huge number of variables involved in retirement planning offers a real opportunity for advisers to help people prepare for this phase of their life.
Defaqto’s analysis of the retirement landscape shows that people preparing for life after work face unprecedented challenges. Increasing longevity means that, for many, retirement is likely to last for many years and unknowns, such as the future needs of dependants and their potential long-term care requirements, make planning extremely difficult.
These challenges are faced at a time when interest rates are at an historic low and investment markets have been poor and volatile, compounding the issues further.
Defaqto’s Through retirement guide, published today, highlights the potential for advisers to grow their business and add value to existing customers by providing guidance and advice on the options available to people in planning for retirement – but, at the same time, the guide emphasises the importance of adaptable long-term planning that takes into account the likelihood of changing future circumstances.
Andy Leggett, Defaqto’s insight analyst for Wealth Management, said: “The retirement sphere has moved from a collectivist position to one where the emphasis is on individual responsibility.
“The number of variables involved in planning for retirement is immense - including pension contributions, investment returns, interest rates, inflation rates, future health, lifespan and the needs of dependants.
“Planning is very complex where so many variables are involved; particularly when many of these are unknowable.
“Fortunately there are steps that can be taken to mitigate the situation, presenting opportunities to advisers. However, it must be borne in mind that planning and advice must start well in advance of retirement and will need to continue as inflation, investment returns, state of health, expectations and other factors come to bear.
“The idea that a standardised solution will continue to fit throughout the entirety of a person’s retirement is manifestly inaccurate – as a result, advisers need to focus on identifying bespoke solutions that meet the specific retirement challenges their clients face.”
