The UK is getting older. According to the Office for National Statistics, the nation’s population of retirement-age citizens is steadily growing, and the trend is expected to continue in the coming years. Naturally, this poses several challenges, particularly when it comes to money matters.
But challenges aside, later-life finance is a growing market that presents major opportunities for advisers.
Why financial advisers need to think about older clients
The cost of retirement was estimated to have surged by 18% in 2022, according to research funded by Loughborough University funded by the Pensions and Lifetime Savings Association (PLSA). Meanwhile, data from Canada Life found that 37% of over 55s say they plan to work beyond the age of retirement. Of those, 20% said the reason was because they were concerned over care costs as they got older. A further study found that a third of over-55s fear that the cost-of-living crisis will hamper their plans to pay off their mortgages before retirement.
So, it’s understandable that many people in the UK are now concerned about how they will support themselves in their retirement – and whether they can afford to retire at all.
“There is an ageing population in the UK with many people looking to retire in the next ten years,” says Gordon Reid, Business Development Manager and Learning and Development Specialist for Financial Services and Professional Education at LIBF. “The cost-of-living crisis means that many people either planning their retirement or already in retirement find their income stretched – particularly as state pension age gets higher.”
Older people’s attitudes to finance – and life – are changing
But it isn’t all doom and gloom. Advancements in healthcare and generally healthier lifestyles mean that people are not only living longer but experiencing a much better quality of life in old age. Nowadays, over-55s have different goals and ambitions – and these require a different approach to later-life finance.
The modern retirement landscape itself is also changing. “Change of regulations, such as the Pensions Freedom Act, mean that there are now many more options for creating and sustaining additional income and wealth,” says Reid. “However, these options are often quite complex and there is no single solution which is right for every customer. This is because there are significant advantages, disadvantages and risks attached to each plan and range of options.”
In other words, financial advisers need to know their stuff when it comes to later life finance. According to Reid, “unless advisers fully understand all the options available to their customers, they will not always recommend the best product/package of products for them.”
What are the best qualifications to advise on later-life finance?
Not only does the UK have an ageing population, but people are getting on the housing ladder later in life, and so will ultimately become later-life borrowers in future. This means that forward-thinking advisers need to be ready to engage with this market. For many, this will mean upskilling.
“Qualifications like Financial Planning in Retirement and the Certificate in Regulated Equity Release significantly increase advisers’ knowledge and understanding of many of the key options available to people approaching or in retirement,” says Reid. “From a customer perspective, they demonstrate that the adviser has acquired specialist knowledge in relevant areas of financial planning.”
Of course, equity release is one of the most common ways for over-55s to unlock some of the capital tied up in their properties. According to Reid, having a qualification like CeRER ensures that the adviser is “fully able to consider how the customer’s property (which, along with any pension, is likely to be their biggest financial asset) can be fully utilized to maximize income and wealth in the long term.”
Why advisers should consider adding to their qualifications and knowledge about later life financial planning
Being able to advise on retirement planning and equity release will open up a world of opportunities for advisers. Qualifications like FPIR, which forms part of our Level 6 Adv DipFA qualification, can also take them closer to achieving chartered status, the highest recognition of professional excellence.
“Undertaking specialist qualifications is a fantastic way of ensuring you can fulfill your duty to offer the best possible advice for an increasingly large percentage of your customers,” adds Reid. “With the knowledge these develop and evidence, you are far more likely to consider and recommend the full range of financial solutions available to them.”
Read more about our FPIR qualification
Read more about our CeRER qualification