Your IndustryDec 10 2015

‘Bringing in financial advice long overdue’: think tank

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The International Longevity Centre UK has called for financial advice to be brought to the mass market.

In Understanding Retirement Journeys, its latest report with Prudential, ILC-UK claimed that a retirement strategy emphasising higher income at the beginning of retirement and securities towards the end may require a significant degree of financial capability among the older population to tweak their retirement strategies.

The think-tank called for the introduction of a full financial health check for those in their early to mid-70s, to be run by Pension Wise, Mas or another independent body.

The report added: “But a one-off financial health check will not be sufficient. Bringing financial advice to the mass market – whether face-to-face, over the phone or on the internet – is long overdue, and we call on the Financial Advice Market Review to facilitate real change in this area.”

ILC-UK’s head of economics of ageing Ben Franklin said: “Our research points to evidence of a ‘default retirement consumption path’, whereby consumption falls lead to savings in later life. This implies people may need a combination of flexibility and security of income in retirement to support higher consumption earlier on, while ensuring people are still able to afford their regular bills in later life.

“Striking the right balance between flexibility and security will not be an easy task, and will require financial guidance and advice throughout retirement.”

According to the 50-page study, individuals aged 80 and over are saving on average around £5,870 per year. ILC-UK calculates that the total yearly value of savings made amounts to around £48.7bn, which equates to 2.8 per cent of national GDP.

Adviser view

Stuart Rodrigues-Pereira, IFA at London-based Meyado Private Wealth Management London, said: “I think financial health checks are a good idea, but the big question is who will actually be willing to offer the service? I don’t think that the banks will do it, and I don’t think the government will do it.”