Financial Advisory

John Hall

Advisory DistributorsFinancial AdvisoryPensionRetirement

Key discussion points:

  • The session centred around the “100 year life” book co-written by Andrew Scott and Lynda Gratton with the thesis being that as we all live longer and retirement pots need to work harder, given the fundamental shift from DB to DC, so accepted wisdom surrounding de-risking and gliding into a conventional retirement needs to be re-assessed.
  • Traditional retirees like “Jack” who was born post war and retired on a fully funded pension scheme made up perhaps by a combination of DB, DC and state, are an increasingly rare breed. Post millennial (Gen Zers) like “Jane” might expect to live 100 years or so, with the state and company funded schemes contributing little or nothing to her retirement pot of the future. Consequently, “Jane” will likely need to be inventive and flexible in her approach to investing, ensuring she maintains a suitable level of risk for longer in order to maximise returns and provide the funding she needs in a longer later life.
  • The question is how much risk should she take and how is that to be managed to meet her needs?
  • The point was made that “Jane” should look to start to save and invest as early as possible and a long way before retirement, with the Aviva team stressing the point that a key element to be considered was to maintain a suitable level of managed risk near to retirement (and indeed beyond) rather than de-risking into so called safer assets which, with bond yields as they are for example, may well not be as low risk as they are traditionally understood to be.
  • The point was made that, all things being equal, it would likely be a missed opportunity (or even mistake) not to take on investment risk early; higher risk with the expectation of higher reward over time, is really the only option.
  • The group discussed the fact that in 10 years’ time more people would be in decumulation than accumulation and indeed only 1 in 5 appear to understand that they are invested at all. The regulator has not done a good job in helping the public truly understand the issues they will likely face and has been quick to shut down bad practices but less good in endorsing good ones perhaps for fear of being seen to endorse strategies that may seem complicated or involve risk.
  • “Alternative” ways to fund retirement might be considered with equity release being one of the potential solutions the group discussed. There was a robust suggestion that any bad press surrounding equity release is ill-founded.
  • The absence of quality risk profilers was also discussed, with suggestions that there are few if any credible suppliers of risk profiling tools for de and accumulation. The question as to whether they might be fundamentally flawed was mooted.
  • The group felt that understanding individual clients’ needs remained paramount with the questions being more of “what are your priorities?” and “what do you want to achieve?” rather than “what products do you want?”.
  • Whether a client is prepared to weather a storm is crucial with a lack of simple quality “sales” aids to help clients understand the likely speed and strength of a market recovery needed to recoup paper losses.
  • The group felt there was a need for a simple cash flow modeler with a lot of solutions on the market being somewhat over-complicated and engineered.
  • A key is to reform/restate issues so they are better understood by clients to help the industry engage the dis-engaged.
  • The Aviva investments team is keen to engage further and discuss investment options for clients mindful of a different way of approaching their retirement needs in taking a more risk-on focussed approach.


Experts: Jerome Nunan, Aviva Investors

Facilitator: Dorian Hughes, Independent Consultant