Can retirees be trusted with retirement income decisions?
The first Professional Adviser Debate pitched Michelle Cracknell, CEOof The Pensions Advisory Service, against Yellowtail Financial Planning’s managing director Dennis Hall on the subject of whether retirees could be trusted to make their own retirement planning decisions.
Over the week, Dennis, who argued that retirees could NOT be trusted to make good retirement decisions, came out on top with 75% of the votes.
To read the full debate, please click here.
Andrew Pennie, marketing director at Intelligent Pensions, made the following comments on the debate..
There are some well made and fair points being made on both sides of the ‘debate’.
Left to their own devices, most consumers would make uninformed decisions and with guidance/advice, they would have a much better chance of making an informed decision.
The pension reforms are positive and it is the success of the guidance/advice piece of the jigsaw that is likely to determine whether retirees make better retirement planning decisions. Guidance and advice working together is the right solution and is a solution that will likely need to change and evolve to tackle the fundamental issues that exist (see below) and allow success to breed further success! On balance, I would be in Michelle’s camp and support her positive views and messages on both the pension reforms and engaging with the UK’s retirees.
Fundamental issues that will need to be tackled:
- Timing: Guidance/advice must start well before retirement to deliver the most appropriate investment strategy and correct ‘glide path’ into the required retirement income solution. Having guidance/advice at the point of retirement only, as per current plans, will be too late for many consumers and poor and uninformed decisions may already have been made.
- Trust: The ‘advice’ industry is still mistrusted and it will take time and considerable effort to change this perception. Free impartial guidance that can direct to advice as appropriate is therefore a necessary middle ground that will appeal to many consumers.
- Knowledge: It is easier to deliver good annuity guidance/advice where a range of definitive options are available and in the UK there is significant experience of doing this. For annuity alternatives, ongoing guidance/advice is needed and the level of skill and experience of the options, factors at play and how those factors will change over time is undoubtedly in short supply and difficult to explain as a ‘point of sale’ guidance exercise.