Speaking at the Dynamic Planner conference earlier this month (February 2), Jane Newman, managing director at Jane Newman Financial Planning said one of the biggest challenges she faced was getting clients to engage with their pots when they are not necessarily looking to retire soon.
Newman said: "People want to engage when they're thinking of retiring or starting their pension but I think we struggle to get them to engage somewhere in the middle.
“We invite them for review every year [but] very few take us up on it. I call people just to catch up and make sure things are up to date.”
Likewise, Tim Morris, IFA at Russell & Co, said he understood the difficulty Newman faced in this area.
“It's generally more difficult for someone who's 15/20 plus years away from their retirement age to be engaged with their pension and it may require a lighter touch service,” he said.
“Many of them value having an online login and an app to keep track these days.”
Morris explained that the general exception is those who aim to maximise the tax efficiency of pensions and look to utilise their full annual allowance each year.
“Other than that, the key is establishing ways of communicating that keeps them engaged and which they find of value,” he said.
“It could be as simple as 'thinking of you' type emails and sharing typical articles on topics of interest, including investment related, and of course an update to confirm if they are on track to meet their retirement goal.”
A close relationship
However not all advisers face the same struggle.
Tom Kean, director at Thameside Financial Planning said the reason for the lack of engagement could be advisers not having a close enough relationship with their clients.
“All I could suggest is that one or two factors are missing, and they are pretty obvious.” he said.
“They don’t make the subject interesting enough, which might be their lack of enthusiasm for the subject or just a lack of personality? Harsh but true?”
Kean explained that making something engaging might be the key, but if certain clients are not profitable it does not make for a good business model.
“If we could focus on client outcomes and not all the regulatory burdens and costs, we could focus more on client outcomes,” he said.
“My solution to all of this is to raise my game with younger clients in terms of empathy and enthusiasm, and the liberal use of cash flow modelling where possible, but that only works for people with cash generally.
“Some younger clients can’t imagine a future with much cash these days. And working a fully-functioning cash flow model takes a lot of time and effort, so that needs paying for.”
In addition, Alasdair Walker, chartered financial planner and managing director at Handford Aitkenhead & Walker, said his firm has a large number of “pre-retirers”, who are in their last 10 years of work.
“We find them very engaged at reviews because we’re updating their plans, confirming how they’re doing towards their (often early) retirement targets,” he said.
Walker said it is dependent on how compelling the proposition is for the client.
“I have seen advisers where they themselves aren’t sure they’re adding value in the “between years” – well if they don’t believe their service is valuable at that point they can be sure clients won’t either,” he added.
sonia.rach@ft.com
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