'Don’t build on sand'
Keith Churchouse, Chartered financial planner at Chapters Financial, said: "Our job is to clarify and set out what they want to achieve, why, how much they need to do it, and whether their aims are achievable with the assets they've got."
A quarter of savers in the UK are concerned their current level of pension won't be enough to live off in retirement, according to recent research from the Pensions and Lifetime Savings Association (PLSA).
Just over a quarter of savers surveyed (26%), who have a workplace pension, think that their current amount of pension saving will not be enough to get by on when it comes time to retire, the data showed.
Research from the Office for National Statistics (ONS) found that UK employment rates for people older than 65 doubled between 1993 and 2018. After the pandemic hit, jobsite Indeed saw a spike in 55 to 64-year-olds seeking work.
And even for those who can afford to retire, just thinking about retirement can be daunting as the planning process can be complex. Many people approaching the end of their working lives therefore seek the help of a financial adviser to prepare their pension and wider finances so that they can retire on their terms.
PA spoke to advisers about their role in supporting clients by planning their strategy for a comfortable retirement. What do clients and advisers need to focus on and what kind of difficulties could be faced during the planning process?
Scott Gallacher, Chartered financial planner at Rowley Turton, told PA that it was most important to fully understand the client's position and their anticipated expenditure in retirement. "A case of doing the financial planning before giving the financial advice."
He said: "Without that full understanding of the client's situation, it is very difficult to provide the right advice.
"However, once you have that understanding, you can assess how much risk they need to take. And how much they can afford to take, their ‘capacity for loss'. At this point, you can then really consider whether annuity or drawdown, or a combination of both, is best for the client."
According to Gallacher, when it comes to potential difficulties, provider errors and delays are a big issue. "Advisers often receive misinformation from providers about a client's plans. And there are frequent delays in providing information or processing cases."
He added: "We're currently trying to transfer a client from the Prudential to another provider. To date, it's taken over eight months."
Gallacher concluded: "Regarding the planning specifically, our clients are great and we have a very honest and trusted relationship with them. But new clients need to realise that they have to be completely honest with their advisers, and themselves, about their situation.
"Without complete honesty about their assets, liabilities and most importantly their expenditure, any financial plan will be built on sand."
'Ask questions'
Keith Churchouse, Chartered financial planner and director at Chapters Financial, said one of the most important things an adviser can do for a client in planning their retirement is to ask plenty of searching questions. "Often clients will come to us with only a rough idea of why they are considering retirement - it might be a desire to leave an unfulfilling job, a concern over money and a need to draw tax-free cash, a health issue… the list could go on ad infinitum.
"Our job is to clarify and set out what they want to achieve, why, how much they need to do it, and whether their aims are achievable with the assets they've got. This is invariably a revealing process - sometimes uncomfortable, sometimes a happy revelation to the client that they will have a far more comfortable retirement than they first thought."
Churchouse told PA that although his firm's clients tended to be from the wealthier end of the ‘mass affluent', they were not immune from the effects of the cost-of-living crisis. "In addition, some are looking to draw pensions early as they face redundancy - or, increasingly, they make the choice to become one of the ‘economically inactive' - neither working nor drawing pension benefits, and living off their other accumulated assets."
Churchouse has just recently published a book "Coming in to land - runway to retirement". It focuses on all things financial for those aged 50-plus, related to ways in which assets can be used to provide for later life. In addition, it looks at business planning for business owner-managers, along with important aspects of retirement such as family, communication and wellbeing.
He said for him, the topic of retirement planning, in both the accumulation and decumulation phases, was never dull. "Indeed, the bespoke service through which we all try to achieve great outcomes for clients is special and individual to each client."
'Science behind the numbers'
Speaking to PA, Chartered financial planner Anna Sofat said: "Ideal retirement planning is starting pension saving the day you start work and having sufficient pension money to fund your desired lifestyle."
Savers shouldn't have to ask themselves if they had saved enough or whether they would run out of money, according to Sofat.
She added that financial advisers could best help their clients by ensuring that they were saving enough at any given age and salary. Spending at a comfortable level in the early and later retirement to ensure peace of mind was equally important, Sofat said.
She concluded: "This means that there is the science behind the numbers, whether its lifetime cashflow or benefits of compound interest and there is art in understanding the clients well enough to ensure they stay on course and sleep easy at night."
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