Retirement planning in volatile markets

When a storm approaches on the horizon it is only natural that most human beings want to shelter themselves from it.

The end of 2011 saw continued headlines about the credit crunch, pensioners hit by fuel poverty, inflation escalating, countries on the brink of bankruptcy and stock markets in freefall.

Pension investors could be forgiven for breaking into a cold sweat and calling their advisers telling them to pull out of equities as quickly as possible and secure any retirement income they could.

To calm clients who were facing this storm of doom and gloom rolling stock market and inflation news on websites, 24-hour news channels and in national newspapers, both advisers and providers agreed communication was vital.

Mike Morrison, head of pensions development of Axa Wealth, said in the eye of the storm it was vital to refocus clients on what their retirement destination was and whether getting there was still achievable.

He said: “I think this idea of talking to clients and setting out their goals gives you the ability to see if their hopes are realistic or not.”

Mr Morrison said the recent volatility in the markets had actually led many pension clients to be realistic about whether their retirement income pots would deliver the kind of twilight years they hoped for.

He said: “Good pension planning is about regular reviews. A good adviser offering a regular, ongoing service that keeps an eye on investment conditions is vital.

“I have spoken to a lot of advisers recently who have said they are very busy because people feel they need advice more than ever. They are also reviewing clients and restructuring investment portfolios for those who have not taken regular advice.

“Good advisers are picking up business by having these processes in place. A good investment process is important. The adviser can act as the moderator and have a view on the world and transfer that to the clients for whom it fits.”

With the Retail Distribution Review looming and an abundance of pension and retirement income options, it was important that advisers hoping to steer their clients safely through the storm stay abreast of recent developments.

Advisers need to take views from an awful lot of people, according to Mr Morrison, but he admitted at the end of last year that could have resulted in them switching clients portfolios left, right and centre and possibly losing cash as a result.

He said the events of 2011 highlighted the need for a good, trusted source of research.

Mr Morrison said: “If advisers are doing the investment process themselves they should be taking an appropriate view of the world from experts who have the ability to do thorough reviews.”