One in five clients think they know better than adviser

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Sep 05, 2019
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Advisers are overwhelmingly with clients who underestimate how much money they will need in retirement, but a fifth of those taking advice still think they know better than the professional they have hired.

One in five clients are sure they are the best judge of how long they will live, according to a survey by Scottish Widows.

By comparison, four out of five advisers surveyed said those who come to them for financial help are not saving enough to pay for what may be decades in retirement.

Men who are now aged 65 can expect to live until they are 87 and women until 89, according to the Institute and Faculty of Actuaries.

When confronted by the fact they will probably live to almost 90, and so need to increase their savings to keep them in comfort, financial advice only has a 50-50 chance of encouraging people to reconsider their financial planning.

Taking the average of people earning the same amount and with similar retirement plans, for an individual currently aged 55 years earning £60,000 a year to retire when they reach 65, the Money Advice Service pension calculator puts their desired post-work income at £30,000 annually.

The Department for Work and Pensions and the independent Institute of Fiscal Studies use the figure at least 67 per cent of current net earnings as a target income at retirement.

Among those clients at the other end of the fear spectrum, running out of money is their biggest concern (43 per cent), with a fifth finding the cost of living higher than they expected, and one in 10 getting less income than anticipated from savings.

Scottish Widows has just launched its standard annuity onto the open market, having previously only made it available to its own customers seeking a guaranteed income.

Annuities director Emma Watkins says: “Life expectancy has grown substantially in the last 60 years and now one in 10 people will live to be 100. We know this is creating new challenges for advisers, as they are having to help clients who could be vastly misjudging the costs of a longer retirement.

“We believe it’s important for people approaching retirement to have access to a range of options on how to access their retirement savings, and that’s why we’ve remained committed to the annuities market while others have withdrawn over the last few years.”


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Money Marketing, Centaur

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