“Additionally, certain perspectives can also play a key role in financial decisions, such as views on inflation and how someone thinks it will impact them and their finances.”
Vince Smith-Hughes, director of specialist business development at M&G Wealth, says advisers tell him that the most important and fulfilling part of their job is to actually listen to what the client is saying, establish their real needs and objectives and then turn these into a meaningful financial plan.
For those at the point of retirement, this will include the pros and cons of drawdown and annuities, while also keeping one eye on the potential for care requirements further down the line.
Client understanding
Smith-Hughes adds: “The ability to interpret and find the right solution for a client is what great financial advice is all about.
“One of the tenets of the consumer duty is to demonstrate client understanding, and this should include the client understanding the risks of any given approach, and the adviser being able to demonstrate that.”
Smith-Hughes notes that one way could be by videoing the client in conversation, playing back an overview of what is recommended.
“Remember, avoiding foreseeable harm is not the same as having no risks at all,” he adds. “For example, in drawdown sequencing risk is a foreseeable harm that an adviser can look to mitigate as much as possible, but investment risk is likely to be present to some degree. The question is how is it being managed, and does the client understand the risk?”
As Tully points out, retirement is also not all about pensions – many clients are likely to have assets in a number of wrappers as well as property, and using those assets in the right order can make a massive difference in terms of tax efficiency and inheritance tax planning.
Likewise the use of trusts and gifting can be hugely helpful planning tools for the right clients.
Tully says: “Advisers can help clients consider the best use of these different assets, and the tax consequences of different options, and make the best decisions for them and their family.
“It's important clients are aware of all options and the pros and cons of each. No solution is perfect, so the right option, or combination of options, will depend on a client’s needs and attitude."
