The future of retirement investing

Financial Advisory

27 November 2018

Advisory DistributorsCash flowFinancial AdvisoryRetirement


  1. Increasingly, pensions are the last asset to be drawn upon - given preferential inheritance tax treatment. Retirement is planning very much an intergenerational discussion. Where pensions are accessed it tends to be to supplement other income through top-ups. 
  2. Equity release is getting a lot more attention. Not necessarily executing on it but allows housing wealth to be brought into retirement planning discussions.
  3. Cash flow modelling is essential but should not be followed slavishly. Rather it should be used as a tool to discuss and manage objectives.
  4. Clients still want certainty but flexibility remains key. Older clients becoming more focused on sustainability and nervous about giving away capita

Key challenges:

  • Retirement planning is complex. Advisers are spending much more time helping clients to understand issues here than they do for accumulation.
  • Danger that cash flow modelling is given too much emphasis. It should be seen as an illustration, not an assurance. Whilst useful it can set unrealisable expectations especially if too detailed.
  • Older clients are starting to move away from focusing on leaving wealth to thinking about how they sustain themselves in retirement. 
  • Limited product development in guarantees space. Client demand for certainty points to guarantees, but reluctant to forego capital.

Conclusions and solutions:

  • There is no silver bullet solution. A hybrid approach fitted to specific client needs is, as always, the best option.
  • Cash management to maximise interest income is seen as a core area, especially given clients’ predilection for holding money on deposit. 

Expert: Paul Boston & Henry Cobbe, Novia Finacial/Copia Capital Management 

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