How are advisers advising in decumulation? That was the tongue twister we put to advisers this week at a roundtable discussion.
There are clear differences in philosophy and approach for IHT planning, investment management, DB transfers and particularly around cashflow planning.
We see a consistently client-centric approach to decumulation. Advisers see themselves as financial life coaches dealing with the currency of everyday life: divorce, dementia, illness and long-term care and overspending in retirement.
They say the days of retiring bang on 65 are over. Some clients have children still at school or university to pay for. Most feel their clients don’t want to give up work as they get older, acting as NEDs or consultants in areas that they are interested in.
So it isn’t really about retirement at all. Advisers are coaching clients on how to draw an income, estate planning, gifting, mitigating tax and inheritance and trusts. These are not conversations that can be resolved in an hour, but as clients’ working lives start to slow down, they have the bandwidth to tackle these issues properly with their advisers.
Decumulation is complex and advisers with the expertise and reputation to offer excellent advice are in demand. Minimum fees are increasing and to paraphrase the iconic advert, it’s because they are worth it.
We will be exploring these themes in more depth in our report UK Fund Distribution: Advice in Decumulation, which will be published in June.