The choices Hobson gives us at retirement



Thomas Hobson, you can choose any horse as long as it’s by the stable door

I’ve been thinking about my options with my DC pension pot. Do I continue to want my money exposed to market risk , do I take an annuity rate depressed by quantitative easing or do I sit on a pile of cash?

If I am still allowed to take this decision for myself (and I think I just about am), then I have a number of options

  1. I can take what help I can that is free – Pension Wise and MAPS and get a clearer picture
  2. I can put the decisions to the advice of an IFA and effectively delegate to the IFA authority for taking next steps
  3. I can execute drawdown myself – or use an unregulated annuity broker – or simply instruct my pension provider(s) to give me my money back.

I am trying to approach this in an unbiased way and have had my Pension Wise interview, which was helpful but didn’t take me very far with regards 2 and 3.

Frankly I see 2 and 3 as  Hobson’s choice. 

While I think I have the freedom of choosing any horse from Mr Hobson’s stable, I am in fact choosing the horse nearest the stable door. I may never see those horses which may be better for me,

Which is why I am still thinking about my retirement options.

If it’s bad for me – what about the person who doesn’t do this for a living?

I have enough money in my pot to be interesting to a financial planer and indeed a wealth manager.

Estimates vary about what the cut-off point is for these services. Financial planners are the people who help you with your future cashflows and show you how you can best deploy your savings and less liquid assets (like your house) to ensure you don’t run out of money as you grow old, avoid unnecessary taxation and achieve what you hope for by way of bequests.

Wealth managers are the people who manage your savings.

From the conversations I’ve been having, it is hard to secure the services of either financial planners or wealth managers if you don’t have £150,000 of liquid capital-  (savings). This amount of course includes what you have in your pension pot.

So while Pension Wise and MAPS are available to everyone, option 2, putting your affairs in the hands of a financial planner and by extension a wealth manager, is only available to a proportion of people making at retirement choices.

There are a number of statistics about how many people are taking financial advice and the consensus is that around 1 in 5 of us take advice when at my stage. There is another statistic – that comes from the FCA – that at any one point only around 6% are actually paying for financial advice on an ongoing basis.

agewage advice

Whatever the percentage who are – or choose to be – excluded from using the services of a financial adviser (whether financial planner or wealth manager), most of us don’t have a relationship with a financial adviser. Much the same can be said of accountants, tax specialists  and lawyers, we do not retain them, we use them when we have to.

So for most of us Hobson’s choice is to do it ourselves.

DIY retirement planning

If you go to see a financial planner, the chances are they won’t recommend an annuity. We had this discussion on twitter yesterday

I will be cynical here and suggest that financial advisers do not want to talk themselves out of a retirement long relationship with a client by suggesting someone like me  buy an annuity.

I have seen the latest rankings of annuities implemented by intermediaries and none of the top players are IFAs or even advisory networks. The top players are unregulated annuity brokers such as Retirement Line and Hub who do not advise on retirement options but implement purchasing decisions already taken by customers.

There is a huge market in DIY retirement planning which includes the purchase of annuities, establishing equity release and the DIY management of drawdown from whatever pension pot an individual has consolidated into.

There is an even bigger market of retirement money which is being transferred to bank accounts for future saving

But the biggest market is for money to just sit in retirement pots because people like me just don’t know what options are around the corner and want to wait for Mr Hobson to put a better horse by the stable door.

Is there likely to be a better choice?

Since the Pension  Freedoms were introduced (and it’s now 5 years since they were announced), there has been very little development in the choice available to us.

I am hopeful that if we get a Pensions Bill this year, we will get a CDC product for Royal Mail at some point in the next three years and that we may be able to get a collective drawdown scheme for people like me to transfer money into before I am 67 (my state retirement age which is in 2028.

I can wait that long – infact I will keep working partly so that I can say “I can wait that long”.

I do at least have the choice of keeping on working, many people of my age find it hard to get a meaningful wage,

My choices are in practice, to work longer, save more and hope that something better comes along.

For many people, DIY retirement planning is a matter of urgency and that may well be the only choice they have – if they cannot find a financial adviser who will deal with them at a reasonable price.

People cannot wait for ever in the Micawber-hope that something will turn up.

Mr Micawber

The DIY approach to retirement planning is what most people will have to do unless something like CDC turns up. It is fraught with difficulty and most people do not get access to all their options. Most people know nothing about annuities and equity release and if they do – they can easily find themselves making decisions when hopelessly out of their depth.

People need signposting to the right kind of annuity brokers and equity release specialists and – if they want to do their own drawdown, they need to be supported in doing this by the provider who offers the drawdown facility.

In short people need help in knowing where to go to do their research before making these hard life changing decisions. That is what – in time – I want to do at AgeWage. But right now I cannot do that, I can only write about these choices and influence those people who respect my views to make smart choices on their behalf and promote smart choices to others.

If you are the kind of person who agrees with helping themselves and others – please read the final paragraph!

Help through the workplace?


Let’s be honest, if you are reading this – you probably aren’t the kind of person who needs a lot of help. You are much more likely to be the kind of person who is puzzling over how you can help others to make the hard retirement choices.

If you are one of those people who organises help for people at work and are worried about your staff making DIY retirement choices, then can I suggest you either get in touch with me , or sign up to one of our four summer workshops we are holding in WeWork Moorgate.


You can sign up for these seminars here


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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8 Responses to The choices Hobson gives us at retirement

  1. John Mather says:

    Henry, you have more options than you outline. The first question to ask is when do you need to draw the income.?

    From the limited information available you are still gainfully employed and you also have DB benefits.

    What is your date of death and how happy are you with the answer?

    Are you going to do anything about it? (Off blog discussion required)

    You first need a review of your total position, construct a cash flow model, build in the effect of uncertainty on the assumptions. All this before you jump to the answer and “product”

    Concentrate on your Why

    I will send to you our planning fact find for you to start ( no charge)

    John Mather
    Stanbridge Family Office

    • henry tapper says:

      Thanks John, I have your fact-find – it is 20 pages long and represents a substantial barrier to me wanting to take financial advice

      i am very aware of my total position, it is indeed complicated – so is life! But I can’t see a cash-flow analysis of where I am today driving me towards a long-term relationship with an adviser – indeed, one look at the fact-find made me want to bury my head in the sand!

  2. Dennis Leech says:

    “What is your date of death and how happy are you with the answer?”

    That is not a question many people can answer. Surely you don’t expect your clients to attempt to answer it!

    • John S Mather says:

      On the contrary most people have a good idea of their life expectancy based on family history.

      However when this is used to plan the cash flows required adding in inflation it can quantify the problem we are trying to solve.

      Now add ten years to the age and think again.

      The average is not really useful and by definition it will produce a poor result for 50%

      What we are seeking to do here is to quantify the real problem, which is that most people spend more time planning their holiday or where to go to dinner than their financial future. It is no surprise that this casual approach produces a casualty.

      It will never be their fault they can easily find some cheap shot at Financial Advisers, Actuaries or Crooked trustees or even fund managers to excuse facing how they fund half their adult life and future care expenses

      On the complexity of the fact find. Maybe you should ask the regulator about “know your client obligations” We have pensions freedoms, we didn’t ask for them, deal with it.

      All I ask is that you don’t give the general public an excuse for not taking actions in their life time by the winging Pom approach to a serious problem,

      • henry tapper says:

        John, it really doesn’t matter if people spend a lot of time or no time at all on cashflow planning, most people will find they are well short of the income they need to do the things they want.

        This financial planning work is beyond most of us – we may be lazy or thick but we just don’t have the financial stamina to see the planning through.

        Which is why people like the idea of what they can get – what Age they can get for their money. Of course the less certainty you can live with, the more ambitious your initial lifestyle

        Having looked through the 20 page questionnaire needed for advisers to provide me with a cashflow plan, I am still unsure that it will help me in years to come as I get even more mentally frail.

        Will you still need me- will you still feed me – when I’m 84?

  3. Mark Meldon says:

    Hi Henry,

    Don’t you think that most IFA’s dislike annuities not because of low rates (remember, most people have somewhat bigger DC pots than they might have thought right now), but because they are a ‘one hit wonder’ as far as fees are concerned? I have arranged several pension annuities so far this year (and even 3 non-pension annuities!) and will continue to recommend them as appropriate.

    I have even arranged 3 RPI-linked pension annuities – a ‘real annuity’, which, I believe is quite rare.

    I was at a conference a few weeks ago and NONE of the other IFA’s I spoke to had arranged an annuity in recent times. They seem to like their ‘ongoing adviser charges’ more than their client’s long-term security, methinks. After all, most people with DC pots today are likely to have DB pensions, state pension, other investments and savings, too, so what is wrong with a ‘mix & match’ solution of annuities to cover off essential expenditure and flexi-access drawdown as to icing on the cake?

  4. John Gathergood says:

    “I will be cynical here and suggest that financial advisers do not want to talk themselves out of a retirement long relationship with a client by suggesting someone like me buy an annuity.”

    Probably very true. I once asked an IFA to recommend a 30 year floating rate mortgage option and didn’t get very far.

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