Pension freedoms have by and large been heralded as a positive change from the somewhat paternal approach adopted by past UK governments to individuals at retirement.
However, it has not been plain sailing for financial advisers.
Insistent clients, DB to DC transfers and robo-advisers are just a handful of the more notable challenges that are facing advisers and planners alike in the new pensions landscape. This was highlighted by speakers at the FT Adviser Retirement Freedoms Forums, which were held in six locations across the UK in September and October, taking in Manchester, Birmingham, Harrogate, Monmouthshire, Edinburgh and London.
So what exactly should advisers do amid a period of unprecedented change and uncertainty?
“I’d take another job guys, do something else,” Robin Ellison, head of strategic development for pensions at City law firm Pinsent Masons said during a panel session that involved Billy Burrows, director of Retirement Intelligence, and Paul Gibson, chartered financial planner at Carbon Financial Partners at the Edinburgh event.
Mr Ellison added: “There is not a safe haven for IFAs. Giving advice now is a minefield and, because things are changing so rapidly, to be an IFA now is a really tough job.”
Despite his view, the vast majority of the audience raised their hands when asked by the panel chair, Emma Hughes, editor of FTAdviser, whether they felt more optimistic about their role post pension freedoms. And there is cause for optimism, according to Mr Gibson. He said that financial advisers are likely to receive more business, which is in part due to a relatively low number of advisers practising in the country.
When it comes to delivering advice post-pension reforms, advisers need to educate their clients on the solutions available to them, make comparisons between the different financial products, and ultimately recommend a proposition, Mr Burrows said.
He added: “The trick to providing advice is to link those aspects together. In doing so, you end up with an advice process that is customer-friendly, clearly compliant and, more importantly, cost-efficient.”
Auto-enrolment, which was introduced in 2012 by the Coalition government and continued by the current conservative government has also been a cause for optimism Paul Lewis, presenter of BBC Radio Four’s Money Box, said in his keynote speech at the same event.
“It works with the grain of human nature. It is done for you, hoping people won’t notice,” Mr Lewis said.
“The latest figures show that people don’t notice and do stay in. Around 4.5m or 5m workers have been put in auto-enrolment to the end of August.
“About one in 10 are opting out, although for some individual schemes that are properly explained to employees it is in single figures. So for the first time this century the fall of those in pension schemes has been reversed – another 500,000 joining in public and private sector employment.”
Mr Lewis added: “But that is inertia rather than enthusiasm. When people look at their payslip – if they even do that – they won’t realise that a percentage is coming off to pay into a pension scheme.”