Investors Post Retirement Abandoned by Pensions Industry

We recently published an article “Swap your UK pension for cash from April 2017” (click here to view) and we have received the following letter from Scott Kennedy of FMA – Astute Financial Management Associates Ltd which we have replicated below for the benefit of our UK expat readers wherever they may be.

Investors Post Retirement Abandoned by Pensions Industry

Every effort is made to handle pension savers with care, but once they hit retirement they are on their own. Once you can exercise pensions freedom, what next?

Retirees are being “thrown to the retail wolves” – left to fend for themselves as soon as they walk out of the door on the last day of work. While workers in the accumulation stage of retirement saving are treated with kid gloves, once you have access to your pension pot it is all hard sell and product pushing. “When you are saving for retirement, all the information you receive is done with a light touch. It is gentle, low cost and takes advantage of inertia,” says Nigel Aston, head of defined contribution for State Street Global Advisors. “But once you retire you are thrown to the retail wolves.

The industry is in your face, heavy handed, high charge and advice driven.” Aston says that this approach may have suited the old guard; those retiring before April last year before pension freedoms activated, but it was not suitable for the masses. “Before last year, 90% of retirees bought an annuity. The only people who had to navigate the post-retirement world of investment were the 10% who could afford a good adviser,” he said. “Now, only 10% of people buy an annuity at retirement, and the remaining 90% are ill-equipped to deal with the onslaught.

The industry needs to adapt to the new breed of customer.” Aston said that the post-retirement needed to better match pre-retirement – a gentle attitude, where doing nothing still gets you results, with a mass-mentality of being “all in it together”. He cites Target Date Funds – which allow pension scheme members to stay invested post retirement, with money managed in a pool alongside other individuals who retired the same year – as one example of the industry getting it right. “I don’t think we will ever get to a point where everyone will be able to, or even want to make major investment decision for themselves,” he said. “It is not right for people to have to DIY retirement investing, they should be able to easily outsource to a professional.”

Technology Lags Product Innovation Dan Kemp, speaking at the Morningstar Perils in Pensions debate this week said that even where financial services had innovated to help meet the needs of investors in retirement, technology was restricting their impact. Kemp, who is chief investment officer of Morningstar Investment Management said that online investment platforms were not set up to pay income monthly to investors – something particularly needed in retirement. “We run multi-asset portfolios with the income investor in mind, but without the platforms putting the distribution channels in place we are unable to deliver the yield to investors,” he said.

 “How can product providers innovate if the infrastructure does not keep up?”

If you would like to find out more information about how you can manage your UK Pension please contact us via the links below.

Scott Kennedy Cert PFS

Director

ASTUTE FINANCIAL MANAGEMENT ASSOCIATES LTD

Tel: +9 (0533) 845 7296 +9 (0533 842 3598)

Email: scott@astutefma.com

Email: info@astutefma.com

Website: www.astutefma.com

Astute FMA are Independent Financial Advice Consultants & act as Financial Intermediaries ONLY.

We are not a bank, we do not accept deposits and we do not hold clients money.

Astute FMA are fully Licensed to act as Independent Financial Advice Consultants in North Cyprus.

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