Michael Rudge talks to Helen Morrissey about how The Hartford's Facing Retirement Forum will help advisers understand their clients' needs in retirement
Tell me about the Facing Retirement Forum?
We decided to start the Facing Retirement Forum as a means to enable us to gain a better understanding of the baby boomer generation and their needs as they approach retirement. This generation tends to have a very different outlook with regards to their retirement than maybe their parents did and as a result their needs will differ. We want to get some level of debate going with the policy makers to see how the financial services industry can meet their needs and in turn this should also help the advisers working in the retirement arena.
It will also help us with regards to product development as if we understand people's needs we can develop the products to meet them.
How do the needs of the baby boomer generation differ from those of previous generations?
There are two or three areas where baby boomers really do differ from previous generations. For a start they are more ambitious about how they want to spend their retirement. They want to travel, do sports etc and they will also be doing these things for longer as life expectancy increases. Another element is that for these people retirement is not an event - it is more of a transition whereby people look to gradually cut down their working hours depending on how financially secure they are.
However, they need to realise that if they are planning such a lifestyle then they need to make some sacrifices in order to fund it.
The key question here is how do we deal with these changes? At the moment the solutions we employ are out of date and we need to build in extra flexibility to allows people to deal with this. We have to help them realise what they need to do in order to get to where they wish to be and we can only do this by highlighting these issues and debating them. We like to think that the products The Hartford has delivered have been innovative and people get more choice.
Who else is involved in the Forum?
So far in addition to The Hartford we are working closely with Professor Simon Biggs of the Kings College Institute of Gerontology, and pensions expert Ros Altmann has also come on board. We are actively looking to get more people involved and we have had a lot of interest from people at the Treasury as well as advisers and charities too. We initially launched in October and looked at the initial challenges people face in the run up to retirement. In November we issued our International Retirement Index Survey which looked at retirement patterns not only in the UK but also in places like Japan, Germany, Australia and Spain. It looked at how people in these countries are viewing their retirement. A big change we noticed was that last year people were worried about how to fund their holidays whereas now they are worried about funding even the most basic living expenses. We recently held an event highlighting the 100th anniversary of the State Pension and we expect to focus on this issue throughout the year.
How are you letting people know about your work?
We ran a series of roadshows around the country to let advisers know about the work we have been doing. We are encouraging them to explore what clients are thinking so they can engage with them in a different way. We are trying to get more advisers involved so we can represent a broad section of views from across the industry.
We've had some pretty good feedback from the launch. People really want to get involved and we've had a great turnout from IFAs at the roadshows we put on. They say it has helped them to have conversations with their clients and really get to the bottom of what they need. There is such a high degree of interest in the market as people want to know how they can help people save adequately for retirement. People have really warmed to what we are doing and so we need to work hard to maintain this enthusiasm going forward.
What will you be focusing on going forward?
Looking forward we want to add more areas for us to debate - this is what the industry should be doing. We've had a very positive year and we hope that growth will continue in the year ahead. In these days where the markets are moving by as much as 8% in a day then people are really beginning to realise the value of a guarantee.
People need to realise that taking money out of a falling fund can deplete it very quickly and become a real burden as people worry about whether they have enough money to live on a day to day basis. With variable annuities you know what income you are going to get - indeed it can only go up. We can leave people to enjoy their retirement years in the best possible way.
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