As a professional, you’ll know that one of the reasons your clients turn to you for advice is that they need an expert to explain important matters in terms they can understand.
It’s no different when it comes to financial planning. Rules and regulations governing pensions, tax, saving, and investing can be complex, and many clients come to us seeking clarity when it comes to protecting their family, growing their wealth, and preparing for retirement.
Indeed, new research from Standard Life has revealed that millions of people find pensions information “overwhelming” and have no idea what to do when they receive a pension update.
Read on to find out more, and why consulting a professional can be so beneficial.
Half of people think pension information is “overwhelming”
Research from leading provider Standard Life has revealed the growing need for more effective advice and communication when it comes to retirement planning.
A survey of 6,000 UK adults revealed half think information around pensions and retirement is “overwhelming”, and more than two in five (41%) admit they have no idea what to do next after receiving pension information.
The study found the current cost of living crisis is also taking its toll on consumer confidence, with just 59% of people feeling confident making financial decisions now, down from 63% in 2022.
When asked what topics consumers want information on to help their financial decision-making, the top responses were:
- How much money their pension will give them in retirement (47%)
- How much money is in their pension pot (46%)
- How to make sure they’re paying enough into their pension (32%).
One of the criticisms of the information individuals receive about their pensions and investments is that it is often very general and doesn’t entirely reflect their own goals or circumstances.
Jenny Holt, managing director for customer savings and investments at Standard Life, says: “The benefits of planning for the future and getting the right support at the right time is clear, but […] the existing system doesn’t allow providers to give personalised guidance that considers individual wants and needs.”
Consumers increasingly understanding the need for bespoke financial advice
The Standard Life research found that, in response to decreasing consumer confidence in financial decision-making, more people are viewing third-party support as beneficial.
83% of people now think financial advisers are a useful source of support – up from 73% last year.
Similarly, 76% say speaking with their pension provider or the information on their pension provider’s website has been helpful.
Jenny Holt adds: “People are looking to trusted professionals for help in uncertain times and this has once again highlighted the value of having access to advice when making financial decisions.”
How we can help your clients in the three key areas identified
One of the conclusions of this study is that millions of people are “overwhelmed” with pension information when, often, all they want to know is how much they have saved, how much money their pension will give them in retirement, and whether they are saving enough.
Of course, the answer to this is different for everyone, and so generic pension information won’t help a client to understand their position.
As financial planners, we can provide great clarity here.
We start by identifying exactly what it is your client wants to do in their retirement. Do they want to travel the world, downsize, or spend more time with family?
By doing this, we can establish the likely level of income they need in retirement and, consequently, the amount of pension savings they will have to accrue.
Using cashflow modelling techniques, we can then determine whether they will have “enough” based on their current assets and projections and, if not, what they need to do to get there.
It’s often a light bulb moment for clients – seeing in black and white that they can afford to retire and that they won’t run out of money in the future.
Get in touch
If you have clients that are “overwhelmed” by their personal finances, or who would benefit from understanding their current and future pension position, please get in touch.
Email hello@sovereign-ifa.co.uk or call 01454 416653.
Please note
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.
