Five benefits of working together to provide more holistic later life advice
Later life advice is becoming more complex. As people now live longer than before the lines between work and retirement are blurring, while the financial implications of an extended retirement and the associated care costs can be daunting.
As a result, the decisions taken near to and after retirement have increasingly long-term consequences. More than ever, IFAs must be able to provide later life advice that is holistic: offering advisory services beyond the traditional scope of work-to-retirement financial planning, while contributing their expertise on topics such as inheritance tax, wills and healthcare too.
A longer journey requires more comprehensive advice
IFAs will be aware of how client requirements are changing with the times. A 2018 Prudential survey found that 86% of IFAs1
reported an increase in demand for later life advice. Of those surveyed, 43% said that clients required advice on long-term care, for example.
Speaking at the National Later Life Advisor Conference, Personal Finance Society (PFS) specialist advisor Tony Miles suggested2
that consumers want a single point of advice to help them deal with the increasingly complex personal financial planning landscape. Miles cited concerns about a transfer of risk from the state to the individual alongside pensions freedoms and the blurring between work and retirement as factors.
But, with such a complicated landscape, which questions are IFAs well-placed to answer, and how can they broaden their advisory role?
IFAs must cover a broad spectrum of financial advice
IFAs are well-placed to answer a range of questions that involve financial planning, but they are also able to tap into an advisory pool that offers their clients comprehensive, all-encompassing later life advice. This ensures that they are able to rely on their own expertise and involve other specialists such as a lawyer or a healthcare expert where necessary.
In acting in a broader, more holistic advisory role IFAs will gain advantages and offer their clients better advice by getting up to speed with or networking with experts in the following areas:
Planning for ongoing care
Many IFA clients will be concerned about the prospect of paying for ongoing care later in life, or indeed, already at a stage where financing care commitments are an immediate concern. Yet only one in five of over-55s surveyed say
they have made financial provisions for later life care. IFAs can play a role in setting clients at ease and in ensuring that the necessary funds required for care is available.
Each client’s care needs are unique, of course, while care requirements can also be unpredictable. IFAs can support clients by finding routes to ongoing care that do not necessarily involve spending a client’s entire pension pot. Aligning the advice of independent care and healthcare experts with their own financial expertise can try to ensure there is some money left after care is paid for.
Ongoing growth in house prices has left many people aged over 55 with a large amount of financial wealth locked up in their main residence. For clients wanting to free up this wealth - downsizing is an option, but as people get older they are less willing to move out of their homes – 64% of over-71s suggest they would prefer to stay in their current property
Equity release referrals with Key Partnerships can help your clients access their property wealth in a way that can suit a wide range of clients. Releasing equity from a property can lead to; help your client’s children get onto the property ladder; help to divide assets following divorce or simply help clients enhance their retirement lifestyle when their pension pot is not quite large enough.
The uses of equity release are almost endless and goes far beyond the view of it being a product of last resort. In fact equity release is an option that, like others, comes with its pros and cons. It is important to think about all options when thinking about releasing equity from the home.
As well as being a core financial planning tool for your clients, equity release referrals can help support your core business by enabling you to manage your client’s portfolio more effectively as well as providing an average referral commission of £1,483 for every completed case with Key Partnerships.
The laws around inheritance taxes are constantly changing and decisions made around retirement and early on in retirement can have implications on the overall tax exposure of an estate. In fact, it is easy to argue that proper estate planning is as important as choosing the right investment vehicles.
Inheritance tax planning and tax efficient gifts can reduce tax exposure. Whether an IFA chooses to become an inheritance tax expert or to link up with another specialist, clients will benefit from an IFA’s influence in the estate planning process. IFAs can also help refer clients with them to a specialist for the process of will writing and execution.
Power of attorney
In later life the risk of being unable to manage one’s own affairs is a growing concern. This could be due to difficulties in making financial decisions that results from declining cognitive abilities and IFAs are well-placed to advise clients on the options around lasting power of attorney (LPA).
By naming a friend, relative or indeed another professional as an attorney a client can rest assured that their wishes are taken care of. IFAs can advise clients on choosing the right person to appoint as LPA, and also discuss the differences between Property and Financial affairs LPA, and Health & Welfare LPA.
Finally, where IFAs find that a client is expressing an interest in retiring or a need to retire, but cannot afford to do so, phased retirement may be an option. Phased retirement mixes a working income with income drawn from retirement savings.
By opting for phased retirement, clients can draw on a portion of their retirement pot as a tax-free income. They can then stretch their pension pot by augmenting this retirement income with work over a period. Indeed, investment advice aside, an IFAs role is also to steer clients to a practical means to a financial end.
A broader approach to later life planning carries benefits for both IFAs and clients
We suggested at the outset that clients value a one-stop shop for advice. Finding just one reliable professional to consult is hard enough, and clients benefit from a well-rounded IFA that can guide their clients on several later-life issues, involving vetted experts where needed. Indeed, IFAs can become trusted, indispensable advisors by taking a 360-degree approach to financial advice. Outlining different routes to paying for care for example, or indeed explaining the option of drawing on property wealth via equity release.
As an IFA, have you found that your clients are asking an increasingly broad range of questions? Do your clients expect you to solve life’s challenging problems using your financial know-how? At Key Partnerships we are always eager to understand the challenges our partners are experiencing – get in touch!
And for more inspiration to help your older homeowner clients see the increasing relevance of equity release as part of your financial planning conversations visit keypartnerships.co.uk
1) Prudential - https://www.pru.co.uk/pdf/press-centre/later-life-growth.pdf
2) Professional Adviser - https://www.professionaladviser.com/professional-adviser/news/3034607/later-life-advisers-must-broaden-approach-to-suit-client-needs
3) Cracking the care Code - https://media.keyadvice.co.uk/mediacontainer/medialibraries/keypartnerships/testing/cracking-the-care-code.pdf