PensionsFeb 18 2020

How to plan for later life

  • Explain how advisers should go about later life planning
  • Describe what clients need in their later life planning
  • Explain the suitability of tax mitigating products
  • Explain how advisers should go about later life planning
  • Describe what clients need in their later life planning
  • Explain the suitability of tax mitigating products
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Approx.30min
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CPD
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How to plan for later life

Advisers are constantly being told that the most important thing that they can do for a client in later life is to conduct some form of estate planning, but is this right?

The population of the UK is getting older and indeed the most elderly cohort is the segment growing fastest of all.

For example, the ONS suggests that by 2041 there will be double the number of over 85s living in the UK compared to this cohort in 2016.

Advisers should seek to understand this fundamental and inexorable demographic change and seize on the opportunities that this will bring, but only if they understand the full implications and adjust their advice models accordingly.

What is “Later Life Planning”?

At Ingenious we believe that “Later Life Planning” can be considered to start at the point of retirement as this is where clients typically transition from being in the “accumulation” phase of their lives and move into “decumulation”.

The population of the UK is getting older and indeed the most elderly cohort is the segment growing fastest of all

This is an important inflection point as it heralds a set of new challenges, but currently many advisers, when prioritising the issues these clients may face and then considering what form any financial planning solution may take, can easily be seduced into focussing specifically on their “estate planning” needs which may actually only rise in prominence later on.

By doing so, they will have potentially over-looked some of their more pressing priorities that their clients face in the first phases of their retired life.

So later life planning encompasses so much more in terms of issues and needs.

For example: how to best achieve an acceptable target level of return in a portfolio to pay for retirement; how to best manage the volatility and sequencing of returns; how to deliver this in as tax-efficient a way as possible; how to deal with the imminent threats of the potential need for long-term care (namely how to best access the correct services and then separately how to pay for them); any vulnerability issues, mental impairment and then, and only then, address any estate planning issues.

It is clear to see how the numerous “Life Needs” of clients can easily come into tension with their “Legacy Aspirations” (or indeed those of their beneficiaries) and advisers have a mandate to deliver on both, but they should always consider “the cost of life before the cost of death.”

So how could you go about delivering both?

Asset Preservation is Key

The overall financial planning objective should be to empower and enable people to plan for the optimal outcomes in later life by giving them:

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