Financial planning and retirement

28 March, 2022Richard Cooper

As a financial adviser, you know later-life planning offers a growing market for your business. But how has retirement planning changed and what skills do you need to serve your clients? Richard Cooper examines the evidence and offers his advice.

blue chair on beachLater-life financial planning has changed in recent decades for many reasons.

Fewer people have access to defined benefit schemes and more rely on several sources of income after retirement. Incomes from pension annuities are at an all time low, and people are staying healthier for longer after retirement. That creates a need to plan and budget for long-term care.

And all that was before the Covid-19 pandemic, furlough, volatility in the markets, high inflation and economic shock.

According to recent research from Aviva, of those who retire early:

  • 68% report an increase in overall happiness as a result
  • 47% report that their finances take a hit, and
  • nearly a quarter (24%) who return to work do so for financial reasons.

While an increasing number of people cite 60 as the idea retirement age, others are leaving the workforce because of redundancy and unable to find new opportunities. A report published last November, reveals that, in the last five years, 11% over-50s have vanished from the workforce for this reason.

Why retirement planning has changed?

Lockdown prompted many people to adjust their priorities and so, reassess their finances and retirement plans.

Traditionally, people would retire in their sixties and live off income from a pension annuity for the rest of their lives. Now they might retire early or late, work part-time in retirement or have some other income to add to their pension.

Your clients may plan to travel when they retire, or devote more time to interests, hobbies and unfulfilled creative ambitions. After an active period in early retirement, people tend to become less active and their costs usually fall. However, because people are living longer, your clients should also consider the possibility of requiring long-term care.

For these reasons and more, you’re likely to find yourself reviewing and updating clients’ retirement plans on a regular basis as their needs and financial goals change.

Skills for advising on retirement and pensions

Because later life planning has become more complex, you need to take a holistic approach:

  • using cashflow modelling
  • encompassing all your clients’ potential revenue streams and assets, and
  • taking advantage of any available tax allowances.

To do that well, you need to able to ask difficult questions, for example about long-term care, health, life expectancy and funeral planning.

Is there a qualification for retirement planning?

You’re not required to have an additional qualification, but this is a specialist area requiring specific skills and knowledge.

Our Level 6 Financial Planning in Retirement (FPIR) is a practical course that will teach you how to take a holistic approach to later life planning. It will help you learn how to ask your clients the right questions and use cashflow modelling to review their options.

You can complete the FPIR in as little as five months, although you’ll have a year to finish it from when you register.

When you’ve passed FPIR, the designation after your name will show you have the expertise to provide the best service for your clients. And it will highlight your professional credibility to peers and networks.

You can also use FPIR as one of the optional units towards the Advanced Diploma in Financial Advice (Adv DipFA), which leads to chartered status.

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Level 6 Financial Planning in Retirement (FPIR)