Later Life  

How to help clients facing later life planning challenges

  • Identify biggest challenges facing later life planning
  • Explain how to help clients prepare for future and unpredictable costs
  • Explain how to mitigate certain risks in later life planning
How to help clients facing later life planning challenges
Credit: Marcus Aurelius via Pexels

Later life planning has become more topical than ever over the past year as our whole industry has worked hard to absorb the changes brought about by the pandemic, progressing financial planning to meet the “new normal”.

This article explores three of the greatest challenges later life planners currently have to consider and prepare for, tax changes, market volatility and the cost of care, and shows how a comprehensive later life plan, delivering more than just estate planning for inheritance, is increasingly important.

The threat of tax rises

In 2019, the new Conservative Government, facing the challenge of delivering an orderly Brexit, but not yet dealing with the impact of a global pandemic, promised there would be no changes to income tax, national insurance or VAT.

Eighteen months on, they find themselves in an unprecedented economic scenario, with a deficit of £394bn (19 per cent of GDP), its highest level since 1945.

While commentators remain focused on the ongoing pandemic and its impact on both lives and livelihoods and when it might come to an end, they also have one eye on the issue of paying for the extreme lengths the Treasury has gone to, to keep the country financially afloat.

Likewise, investors are equally mindful of this issue. If the government needs to balance the books through fiscal policy, how will any decision made now fare in a post-pandemic financial future?

For advisers, there are two clear ways to approach this planning dilemma.

Firstly, one could attempt to foresee the future and plan for the measures that might be implemented in the coming months and years. The problem with this approach is that one would need a crystal ball.

Secondly, one could accept that there is no way to predict the measures that will come into effect and wait until there is some form of clarity.

But herein lies the problem of delay in the face of continued uncertainty.

For almost a year now, many have held off on vital long-term plans due to the fear of the unknown, yet they need to accept that another year or more of inaction due to the potential of further uncertainty comes with its own real risk.

And the longer it goes on, the more risk they are taking.

The simple answer to this conundrum is to embrace a strategy which remains flexible to any possible changes, but in the meantime delivers on the key outcomes the client requires.

Any financial planning strategy needs to stack up in line with the wider objectives of the investor, such as achieving investment growth, rather than focusing purely on the tax advantages of a particular strategy, as these could change or even disappear.

This is why I believe advisers should be developing a wider later life planning proposition, and not just narrowly focusing on estate planning.