When advising a client on a long term savings strategy, choosing the right tax wrapper is just as important as choosing the right investment strategy.
- It is no longer the case that all long term savings are linked to earnings.
- Cash savings have increased dramatically.
- The Property Market has had a massive affect on Long Term Savings.
- Divorce has affected property ownership, particularly between the ages of 34 and 54.
- In the participants’ opinion, the younger generation may not want to get into the property market (in London this is the case now).
- 39% of millennials would rather invest in cash.
- Auto Enrolment has made people have conversations about savings.
- Restrictive Pension Allowances have crashed investment into Pensions.
- Most investment in ISAs is in Cash.
- Average ISA investment is just £6000.
Key issues and challenges:
- As a lot more women than men live beyond the age of 90, what advice do they need post retirement, particularly without an annuity?
- What should you do if a Pension Fund is more of an IHT planning solution?
- There is an education issue around Auto Enrolment. People are happy to opt in but make no additional investment.
- Creating a different asset allocation post retirement.
- What products should people be investing in and withdrawing from, and in what order: pensions / ISAs / GIAs / Offshore Bonds…
Conclusions and solutions:
- For women post retirement (obviously depends on circumstances):
- Advice needs to be holistic.
- If they only have a pension, then income from pension.
- What do the beneficiaries want?
- If in care = big problem.
- Equity Release is now playing a large part in providing for retirement.
- Education is a massive issue and the Financial Services Sector is very poor at communication.
- People often see IFAs for income advice – they want to know that they can do the things they want to do.
- Is it true that the younger generation may prefer to rent property as they do for music, cars, etc…?
- The reasons for low amounts being invested in ISAs may be:
- The Government’s Help to Buy scheme.
- Salaries haven’t increased.
- People would rather spend money elsewhere.
- There has never been a better time when people need to take professional financial advice.
Expert: Paul Speight - Canada Life
Facilitator: Paul Miles - Silverback Consulting