The value of advice in later-life planning
Your adviser can help you find the confidence to know you’re heading for a secure financial future
The era when everyone knew what their retirement would look like – when you reached a certain age, were given a carriage clock and finished working for good – has long gone.
Instead, because of the greater pension freedoms we now have, and the abolition of the compulsory retirement age, most people in their 20s, 30s and 40s – even 50s and 60s – are unlikely to know what shape their later life is going to take. And that’s no bad thing, as it’s great to have the ability to be flexible and change your plans throughout your life.
It also means you’re more likely to be thinking about long-term investing for your future, rather than saving specifically for retirement.
For example, you might want to retire early, carry on working into your 70s, start a business, travel, or give everything to your children. Or you might just want to build up a pot of investments and capital that you can use however you like later in life, as you don’t yet know exactly what you’ll do – which is also a perfectly good aim.
However, such flexibility can lead to worries along the way, as with this freedom of choice comes greater responsibility for the financial planning for your later life.
This is where the value of professional financial advice comes into its own. An adviser can alleviate those concerns and build your confidence. They’ll do this by helping you to see the bigger picture while setting you on the right path and keeping everything on track, whatever your objectives are and however they might change throughout your life.
First and foremost, an adviser will take the time to get to know you and understand what you’re aiming for – even if it’s currently vague – all the while earning your trust by imparting helpful, honest and impartial guidance.
A lot of people get caught up in the products available to help them accumulate their wealth, or by looking for ‘quick win’ investment opportunities.
But good advice isn’t just about the numbers or the technical aspects of finance. Of course, those are important, but it’s also about being able to contextualise everything and aligning your choices to suit your goals.
Only then, once this is all clear, would you start to think about the right products to choose, such as pensions, stocks and shares ISAs, property – or, most likely, a diversified mixture of some or all of these – which will lead you towards the outcomes you’re looking for.
Avoiding emotional decisions
Also, an adviser will help to take the emotion out of any decisions you make. This is particularly important when a major event happens in your own life, or if outside economic influences – such as the current situation in Ukraine or the COVID-19 pandemic – start to cause concerns.
A valuable conversation with your adviser could be triggered by a wide range of personal events, such as getting married, getting divorced, starting a family, needing long-term care, having a critical illness, losing a job, starting a new business and so on. At such a point in life, when left to their own devices, people often make short-term decisions driven by behavioural biases that could potentially lead to long-term negative repercussions.
The same is true when it comes to outside influences, such as the current volatility in the financial markets. These things can often – understandably – be unnerving, especially if it’s unclear how the world might look in a few months’ or years’ time.
However, an adviser can explain that it’s very normal to see such volatility in the market, no matter how uncomfortable it might make us feel at that moment. They can listen to your concerns and reassure you – for example, by reminding you to ‘zoom out’, looking not at what’s been happening to the markets over the past few weeks, but rather over the past five, 10 or 20 years.
That’s because, as all good advisers will tell you, it’s important to think in decades not days, to hold your nerve and remember your long-term objectives.
Whatever the situation, an adviser will be able to talk you through your most appropriate course of action, given your particular set of circumstances. Sometimes this might involve making some careful adjustments along the way, but equally, it could also mean just holding tight and riding out the bumps.
What’s more, these days – largely driven by the pandemic – people find that they speak to their adviser more often, as it’s so easy now to jump on a video call for a short check-in.
Sometimes this might be a quick chat to find out how you’re doing and if anything has changed, rather than an in-depth look at your portfolio (which would usually happen on a yearly basis).
And for many clients, this can be one of the most valuable things about advice: understanding that your adviser is always there to provide you with the reassurance of knowing that everything is on track.