To infinity and beyond: What longevity means for advisers

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To infinity and beyond: What longevity means for advisers
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“To infinity and beyond…” is a cry many of us heard from our kids as they grew up in the nineties.

We aren’t quite there yet with medical science, but we have come a long way. We are all benefiting from an increased life expectancy and this in turn is leading us to some challenges along the way.

As people live longer, they will need to make their savings stretch further - and for some, this could include meeting costly expenses caused by ill health. Advisers will therefore play an increasingly important role in people’s welfare in later life.

It is a common opinion that some people expect to suffer from a major illness as they grow older age. It is not unusual for people to assume they will live into their 80s, or even 90s.

Predictions from the cancer trust Macmillan suggest half of the UK population can expect to be diagnosed with cancer at some point in their lives by the year 2020.

This highlights the absolute need for clients and their advisers to prepare for the ‘unexpected’, as the risk of ill health for people in their later years, and the associated costs, are growing considerably.

Whether that is to ensure people have sufficient income for the retirement they wish to enjoy, or have a means of protection for later life through insurance, people need to have regular conversations with their advisers.

eValue’s new online pensions freedom planner clearly illustrates the longevity challenge faced by those approaching retirement, already enjoying retirement and for whom retirement is far in the future.

Helping clients understand the impact of the extra years living on their income is crucial. Using a planner such as this can help illustrate the impacts of living longer, balanced with meeting a client’s income needs, desires and potential outcomes. Seek too much income and the consequences are clear.

Maintaining a view on current market conditions is essential to give clients a clear picture of their circumstances, in the years running up to retirement, and at the point retirement choices are finalised. This planning can be rerun and updated as often as required, and I believe will become an important part of an adviser’s review process.

The longevity impact is clear for all to see: how advisers most effectively support their clients in planning for retirement and old age is nothing new, but technology like the pension freedom planner provides great support in these discussions.

With the options clients are now afforded by the new pension freedoms legislation, providing tools that offer flexibility to design and maintain income flows for clients using different tax wrappers on platforms presents a great opportunity for advisers to continue to deliver to client needs.

We’re all living longer – and advisers play an increasingly important role in the quality of those years.

Alistair Wilson is head of retail platform strategy at Zurich