There used to be a time when getting old was seen as a burden on the society. Today the post-retirement generation includes some of the wealthiest and most sought-after sections of society.
We keep hearing about the ageing of the population, but it is often hard to put this into figures. Fortunately the Office for National Statistics did that recently with a report on the older population – a group that financial advisers clearly cannot afford to ignore. It is growing in both number and wealth.
The most astonishing increase is in the over 90s. There are now more than 556,000 people in the UK who are aged 90 or over. In 1985, this figure was less than 195,000. There were 3,420 centenarians in 1985. Today there are 14,570. Those numbers are likely to grow too.Organisations such as Solla, the Society of Later Life Advisers, and other groups are catching up with the potential of this market but there is a long way to go.
When people talk about the ‘advice gap’ they are probably referring to the 30 and 40 somethings who are struggling to pay for financial advice and facing the reality of a potentially meagre auto-enrolment-based pension. One survey recently found that those in their 30s were suffering a significantly poorer standard of living than people of a similar age in the 1980s and 1990s. No wonder they struggle to pay for financial advice.
The reality, though, is that many people are living to a much older age and that brings with it all sorts of challenges, including running out of pension. This is a risk that is beginning to materialise in the US where some people in their 70s and even 80s are returning to work.
Here we are following that trend. Income drawdown, or some variation of it, is the new mantra since the pension freedoms arrived and while it has benefits it also brings risks.
For example, I wonder how many will blow a large part of their modest pensions in their 60s and 70s only face living to 80 or 90 with a dwindling pension in terms of real value. This is something the financial services sector has yet to face up and it is potentially a huge problem.
Let me stress here that living to an ripe old age is not a problem, it is a wonderful thing and many will enjoy more years of life than they expected. This is something to be celebrated but it also has to be paid for, and wisely.
We have yet to see reports on how the over 90s fund their lifestyles. I suspect some will be enjoying gold-plated final salary schemes. Others may simply have had to cut back or rely on the state for later-life care.
It is no wonder there is a boom in building homes, not for the first time buyer, but for the newly retired and older. Near where I live in west London, one retirement developer is marketing one-bedroom upmarket apartments for over £450,000 complete with on-site restaurant. That is not something within reach of an elderly couple who are reliant on the state pension.
Equally, I suspect that some older senior citizens are actually better off than they expected to be. Index-linked pensions, state benefits that have kept up with inflation and more, and the ability to work if they want to are leading to a wealthier retired population.
This group, who are susceptible to pension scammers and all sorts of crooks, is among the most vulnerable in society and needs not just good advice, but support and protection generally. For advisers who are able to help this group with robust and reliable advice appropriate to their needs, they may well find that their silver-haired clients are a golden generation of new customers.
For financial advisers it may well be wise to specialise to some degree. With such a huge age range to cater for, from clients starting families in their 20s, to some who are nudging 100 years old, the range of options advisers will have to consider must be huge.
It may well be the case that in future advisers will choose, through choice or natural selection, to decide to focus on one age range of clients. That may be wise.
I have never seen reliable evidence on this, but I do know that many advisers focus on particular groups. I have met advisers who focus, for example, on professional footballers or teachers or doctors, who are carving out a niche for themselves and finding value in specialising.
In future, more advisers could focus on the over 60s, or over 70s and 80s, and that may be no bad thing. It may even be sensible for advisers who are in that age bracket themselves to carry on advising people of the same age if they are fit enough and willing to do so.
Kevin O’Donnell is a financial writer and journalist
