What's another year @Pensionsgirlieblog 2.4.18
What’s another year?
I spent some of the time between Eastern Beasties out on the road with our retirement analysts observing client review meetings. All the clients that we met had seen their funds do well during the last 12 months and had no new issues to raise with us. This is marvellous of course but it did lead to one of the clients questioning why we were bothering to have the review in the first place.
The answer to that is twofold:
There might have been significant changes in the markets or the client’s life, and even small changes if left unmanaged can have an increasingly significant effect on their retirement plan
The review reinforces the client-adviser relationship and makes it more likely that any major changes will be picked up on a timely basis.
The concept of a “journey” is much over-used in the context of life events – you only have to listen to reality TV contestants to realise that – but it is a useful way of visualising a financial plan
You can, for example, start out on Good Friday expecting a 4 hour drive to Manchester only to find that a lorry has shed it’s load on the A74 and there are unexpected roadworks on the M6 (although actually the latter is fairly predictable, it’s just a matter of where on the M6), which mean you have a choice of waiting it out, going by a different route or deciding that you don’t really like Manchester that much anyway.
It seems likely that market conditions in the next 12 months will be less favourable than the last. Many clients may be able to sit this out, especially if they are not intending to take any income at this time. Some might have to look at encashing more of their cash and fixed income funds rather than equities, while others might look at using non-pension assets to provide income instead. What they should not do is decide that investing in a pension is too risky, take all of their money out and invest it elsewhere. Not only will this incur tax penalties it is exactly the wrong time to dis-invest and simply consolidates the loss.
And this of course is where advice comes in.
An adviser can provide timely warning of bad times ahead, and help people to navigate their way through them.
I don’t personally believe advice should be mandatory for retirees - it just leads to resentment - but there is a lot that could be done to communicate the advantages of taking advice, and not just by the pensions industry. Both government and employers could provide information and guidance to help people understand when a pension advice service is most likely to be beneficial, in good times and bad.
On the easter front the offspring did rather well this year. Not one, not two but three enormous eggs from family and friends, each stuffed with additional goodies plus two chocolate rabbits (you know the ones, gold wrapped and a little red bell round the neck) while I got a bag of mini eggs.
On the plus side, mine will be easier to eat. Instead of having to break the head off a cure little animal or smash a perfect chocolate oval I can eat them one at a time. I’m sure there’s an analogy about phased retirement in there somewhere.