Published 18 of August 2015
It’s a new world out there for people approaching retirement – and potentially a new golden age for those who advise them. The need for advice has never been greater, so it’s vitally important that the industry works together to ensure that people can access the right help in good time.
The needs of a client change fundamentally when they pass into retirement. This can require increasingly complex-seeming advice, so adviser businesses must consider how to deliver this in a scalable and controlled manner. It demands, for instance, clear and defined processes and policies around tax optimisation, investment volatility management, tax wrapper and portfolio targeting, client withdrawal policy and estate planning.
If you as an adviser can put together a clearly defined proposition and business process built for clients in retirement, I believe the efficiencies realised will enable you to offer a top quality service to greater numbers of retired clients, while managing your business risks more effectively. I’ve put together ten tips to prompt thought around some of the key issues, and how to make the most of the new opportunities.
- Find out if you have clients who could miss out. Review legacy pensions to understand which contracts can support new flexibilities on death.
- Prepare to transfer pensions that do not support death benefits as soon as possible, and consider aggregating pension assets with other client assets.
- Review all pension bypass trust arrangements and death benefit nominations to ensure they are up-to-date.
- Review ISAs to establish whether the client would benefit from transferring to a pension to access tax relief.
- Develop a tax optimisation policy for assets being invested pre-retirement, outlining which wrappers should be prioritised and why.
- Enhance your CIP to meet the needs of clients in retirement – reflect the difference between short, medium and long term monies and protect your clients from the devastating long term impact of a short term market fall in the early years of retirement.
- Develop an income optimisation policy for withdrawals; document the order of wrappers and investment portfolios used to support withdrawals to minimise tax and investment risk.
- Agree a clear withdrawal policy with your clients, documenting the sustainable asset harvesting approach you have agreed.
- Document your end-to-end retirement advice service for clients, highlighting the measures you are taking to ensure the sustainability of their investment portfolio.
- Review due diligence against your new documented proposition to ensure your business model for clients exercising retirement freedoms is well supported by your providers.
These tips are designed to highlight immediate risks and opportunities, as well as longer term strategic considerations. Bear them in mind and build on them, and you may soon be helping many more clients to achieve their retirement goals.
For more information please visit: www.adviserzone.com