Saving time and providing more for your clients in retirement

Advisers face many challenges when providing for clients approaching or in retirement. Not only are there new risks to be aware of, but other considerations must be taken into account, such as cashflow or tax planning. This can take up a lot of an adviser's valuable time to plan appropriately.

Inflation, volatile markets and a rising cost of living have been topical issues on the minds of many financial advisers and their clients in recent months. As clients enter retirement, they will need an investment strategy that both provides growth and generates a sustainable income, which can take up a lot of time to plan. It is also important that an adviser is able to spend more time with clients, coaching them on how to deal with market swings and changing their retirement plan, where necessary.

Therefore, finding a tool that can stress test the impact of market events on a retirement strategy can save an adviser valuable time, and enable them to better focus on a client's financial wellbeing.

Retirement technologies can enhance an advice process

A lot has been said about spending patterns of clients in retirement and how they shift over time. Conventional wisdom said that people spend less as they age, but a new study from the IFS has challenged this way of thinking, saying:

"…….we find no evidence that on average the spending needs of retirees fall at older ages. Thus, planning drawdowns based on an expectation of lower spending in late retirement may result in unexpected shortfalls in standards of living once older ages are reached. Instead, our results suggest that people’s desired spending profiles are on average flat (and possibly slightly rising) in real terms" – Institute for Fiscal Studies (IFS) – May 2022

It is therefore clear that new approaches to decumulation reviews are needed to help provide a suitable and sustainable income drawdown. 

“Income drawdown requires regular reviews. There is a real risk that drawdown would not be sustainable without one. Investments that generate retirement income are exposed to changing factors that could impact the client’s lifestyle. Ongoing reviews reduces your firm’s liability risk, reduces client risk and provides evidence of a robust retirement advice process in place”

This focus on client suitability means it is crucial for an adviser to be able to demonstrate their methodology and to use a trusted toolset. Properly scheduled and regular client reviews can help provide an adviser with the up-to-date information needed to make informed decisions that are in the client's best interests. However, collecting this information and doing a manual review can take up valuable time that could otherwise be used to provide a better service to clients.

A review tool to save time

At FE Investments, we recognise that an adviser's time is precious and have developed an extension to our Decumulation Illustrator tool to help with client reviews. Providing all the information an adviser may need in one place can reduce the time taken to prepare for a client's review, allowing for extra efforts in the places where it is needed most.

The Decumulation Illustrator helps proactively schedule client reviews, allowing advisers to stay on top of the progress of the client's retirement journey, tailoring to their specific needs and helping to give good advice while managing expectations. The tool can also help illustrate the likelihood of a client reaching their retirement goals. Within the tool, advisers can consider the overall client retirement experience in the context of key areas - the client's income objectives, withdrawal strategy, sustainable income, longevity and inflation risk, investment risk, and a set of guiding principles. It also helps demonstrate a consistent approach to retirement advice and assists with assessing client suitability.

Saving time with the Decumulation Illustrator

The Decumulation Illustrator has been developed to integrate seamlessly with other tools and an adviser's existing process. The tool sits within FE Analytics and integrates with any existing client profiles that are already set up in the system, so there is no need to re-key client data, saving valuable time.

The tool has been designed with simplicity in mind to keep the interface as easy and straightforward as possible, so advisers can get straight to the information they require as quickly as possible. It is fully integrated with the FE Investments retirement income portfolio and can provide predicted outcomes across a variety of scenarios to help advisers select the most suitable positioning for their client with minimal time taken.

Important information

This is a marketing communication, intended for professional advisers only. Not for use by retail investors. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy.  The value of investments and the income from them may go down as well as up and you may not get back the amount originally invested. All information is correct as at the date of publication unless otherwise stated. Where individuals or FE Investments Ltd have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.

This communication contains information on investments which does not constitute independent research.