21st Century Retirement Income Update



Well here I am in a Village hotel under the M1 seven miles south of Leeds to chair a day long conference on the opportunities for financial advisers from George Osborne’s Budget Changes (the photo is the lovely view from room 107)IMG_4643

I’m here to listen and to listen to the mood music of the IFAs present. On Friday I am spending the best part of the day at the FCA informing the regulators on the New Annuity Guidance Framework .

One thing’s for sure, this country is not short of financial advisers. The issue is whether the collective energy and experience of the financial advisory community can be effectively harnessed to deliver first guidance and ultimately advice on how people should organise their finances in later years.

Looking through today’s agenda , I am encouraged by talks on “balancing the budget” and “what the reforms mean for clients”. They are balanced by sessions concentrating on how existing products can be brought into play to meet demand created by the Freedom of Choice in Pensions from 2015 (and in the interim).

The budget could be such a game changer for financial advisers.

They’ve seen their traditional revenue sources taken from them by the Retail Distribution Review and the successive waves of pension reforms that will culminate in the retrospective abolition of all commission based workplace pensions used for auto-enrolment in 2016.

To date there has been no replacement revenue stream. But in the budget, George Osborne proposed a Guidance Guarantee to ensure that everyone with a mature DC savings pot would get the guarantee of a short session with an adviser to understand their retirement options.

There’s a great thread on the Pension Play Pen linked in group this week in which all kinds of people are discussing just when this “Guidance” becomes “Advice”. I’m pretty clear in my own mind that Guidance is at the top of an inverted pyramid and “Advice is the pointy bit at the bottom when a “definitive course of action” is delivered.

Anyone who is familiar with the broad concept of selling knows this inverted pyramid and that you cannot just go to the pointy bit.

You start by laying out the options (guidance), you examine which are best for you and then drill down to what you should be doing right now.

Advisers should see Guidance as the option to open up the long-term relations with clients that profit them and their practices.

And the great thing is it looks like those with the obligation to provide this guidance (trustees and the IGCs of contract-based providers) are going to be the paymasters guaranteeing not just guidance but income to the advisory community.

This looks like the golden goose for advisers, the opportunity to build trust with future clients while getting paid for the prospecting.

If I was an adviser , I’d be thinking how I can hatch this golden egg without the risk of cracking it before my gosling’s born.

By the end of today I should be in a better position to understand whether the IFA community share this view or whether they have other ideas.

Like I said, I’m here to listen and that means I may be thinking very differently by this evening!








About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to 21st Century Retirement Income Update

  1. Sorry to burst the bubble, but the one thing for sure is that there are not enough “financial advisers”. There are roughly 24,000 of them of which about 2,000 are financial planners, who generally serve about 100 clients each as a maximum, which is about 0.3% of the uk population at 200,000.

    Realistically Pareto’s law suggests that 20% will actually seek advice. 12.4m/62m. So the remaining 22,000 advisers are in theory going to be advising about 12.2m between them (19.7% of population). Over 500 each (good luck with that!).

    The Chancellor is making a promise that he cannot keep. 700,000 people turn 65 this year. The numbers might be a little off, but not by much (out of 62m).

    Financial service is full of misleading numbers, but the ONS data about populaton and the demographics are fairly solid.

    By comparison there are about 127,000 licensed and active solicitors. Nearly 6x as many compared to financial advisers.

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