Retirement planning has never been more complex. With changes in tax legislation and pension regulation, and hopefully a long retirement ahead, individuals approaching the end of their careers need to navigate an increasingly challenging backdrop to ensure their financial needs will be met when they retire. Add in an uncertain macroeconomic environment, and the risk of not having a clear plan can have a serious impact on retirement quality and lifestyle choices.
“If you get it wrong, you can end up in a series of complicated situations where you might not be able to do the things you want to do in retirement,” says Ross Liston, CEO of M&G Wealth Advice.
Seeking financial advice is a good idea, as it can help individuals to enjoy a stress-free retirement. Here are five ways that individuals can benefit from engaging with a professional financial adviser.
1. Make the most of retirement
Working with an adviser can help people to map out their retirement goals and ensure they have the right plan in place to meet those objectives. “A bit like SatNav, you may need to make tweaks along the way. So it’s about helping clients to navigate changes in the environment and understand the impact of those changes on an ongoing basis,” says Liston.
An adviser can also help clients manage their assets more effectively, says Ryan Nobbs, a financial adviser for M&G Wealth Advice. “Whereas a client might have been saving previously, they’re now going to start to draw an income from different assets, so it’s about putting them in the right products – whether it’s a pension, an ISA, a bond – and then drawing the income at the right time and, critically, keeping it within certain allowances,” he says.
2. Preserve a legacy (and navigate inheritance tax)
Inheritance tax rules can make it easy to be wrong-footed without the help of an adviser when it comes to passing on wealth. “Inheritance tax is a complex area,” says Nobbs. “There are many ways to manoeuvre through inheritance tax planning as there are a range of products that can help mitigate or reduce inheritance tax. This is one of the many reasons why it’s important to review your ongoing financial position.” The tax you pay will depend on your individual circumstances and rules can also change.
Advisers can help clients engage with their families on financial planning issues. “It can be very difficult to talk to your family about this because as a society we don’t like talking about money and death,” says Liston. “There’s so much you can do around legacy, around gifting and around trust planning. But I worry that so much of society doesn’t know about that, let alone have access to it.”
3. Reduce admin headaches
While online services make it easier for customers to view their products and performance, having an adviser on hand can help clients understand the options available to them and reduce the admin burden of managing products, allowing them to focus on enjoying their retirement. “If you’re not using an adviser, how do you manage your investments and how do you know you’ve selected the right products for you?” says Liston. “Then you get into the world of tax returns, estate planning, gifting and wills. It’s pretty hard to do all of that yourself, which is why a professional can help customers to cut through the complexity.”
Retirement planning is not a one-off event, either. With the popularity of income drawdown, “investment doesn’t stop at retirement, so you need an element of expertise to know how to get the right blend and the right balance in your investment solutions,” says Liston.
4. Tailor the plan to individual needs
An experienced adviser can help craft an approach that is customised to a person’s unique circumstances rather than being a generic, off-the-shelf retirement plan. For clients, often the most important requirement is to ensure their family is looked after.
“Sometimes they don’t realise that this is something they need to address until you mention it to them or a friend has passed away and their family didn’t realise that a big tax bill is in the offing,” says Nobbs. “Engaging with an adviser is probably one of the most important things you can do, especially if you have a family.”
5. Benefit from the value of advice
By getting a clear idea of an individual’s financial goals, an adviser can then position their assets in the most tax-efficient manner possible, potentially helping to save clients a significant amount of money. For instance, Nobbs was able to help one of his clients move money into a range of tax-efficient products so that she could draw an income and wouldn’t have to pay any tax until she was about 88. “They live comfortably now and her husband was able to take early retirement as a result,” he says. Nobbs was also able to help another client save 40% on a £600,000 inheritance tax bill.
“People can become really stressed about how they will fund their retirement because they don’t know what position they’ll be in, so it pays to have a conversation with a financial adviser,” says Nobbs. While saving is one obvious benefit, the value of advice runs deeper. “It’s all about giving people peace of mind, understanding their needs and helping them live the lifestyle and the retirement they want and to look after their family if anything should happen,” says Liston. It’s worth noting that, while the examples provided can help demonstrate the value of advice, every individual’s circumstances are unique and each outcome is different.
Seeking financial advice might seem overwhelming. It’s often not a question of affordability but of trust. In the UK, that is fuelling a growing advice gap – only 11% of adults surveyed said they’d paid for financial advice in the past two years, according to Lang Cat research. That is why it is so important to choose an adviser with a solid track record. M&G Wealth Advice, for instance, with its link back to Prudential, has a history of helping customers with their finances that stretches back 175 years.
“The world of financial advice in the UK is our heartland,” says Liston. “If we go back many years, the term ‘the Man from the Pru’ resonated up and down the streets of the UK. That heritage and the breadth of our propositions mean that we can serve customers’ needs at any point in their lifetime – and that helps build trust.”
M&G Wealth Advice makes financial advice more accessible for more people. That’s why their advisers are experts in a broad range of financial areas. They specialise in recommending products from Prudential and other carefully selected partners. This is known as a restricted advice service.