Oct 18 2017

We must do more to help clients face the challenges of later life

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

I was delighted that FCA chief executive Andrew Bailey devoted part of his recent Guildhall speech to the issue of our ageing population. This followed the FCA’s excellent paper highlighting the scale of the financial challenges facing the elderly and the need for urgent action.

This makes it all the more worrying that already many thousands of people have taken advantage – if that is the right word – of pension freedoms and have cashed in their pensions in early. It seems inevitable that many of these individuals will later find themselves struggling. What they hoped would be their golden years will have disappeared, just like the proceeds of their pension freedoms cash.

While this is only one of the many problems facing the elderly, whether it is maintaining their lifestyle or funding long-term care, there is not a problem they face that having more money would not make easier to solve. Perhaps this is what Mr Bailey had in mind when he highlighted the need for innovation in the mortgage sector and, by implication, equity release, both of which featured strongly in the recent paper.

What they hoped would be their golden years will have disappeared

It is absolutely right for the regulator to shine a light on these issues, but in reality I do not believe it is going to be possible for the FCA or the financial services sector on their own to resolve the looming crisis facing the elderly. It will need co-ordinated action by government on taxation, savings, pensions and long-term care.

A simple first step would be to change the age when pension freedom kicked in from age 55 to six months before the normal retirement date. For political reasons I doubt this will happen, or at least not yet. I do, however, think we will see higher rate tax relief on pensions ended in the Budget next month.

The problems facing the elderly demand urgent action and, to quote Mr Bailey: “Consumers are being asked to take responsibility for increasingly complex financial decisions in later life, including planning for retirement and periods of ill health.”

Advisers cannot solve all their problems, but consumers who benefit from financial advice end up far better off than those who do not. I believe it is our job to make sure we help as many clients as possible prepare for the challenges they will face in later life.

Ken Davy is group chairman of SimplyBiz