Are individuals today more cautious as they approach retirement?
We have not seen direct evidence of this yet, but I do believe we will move in that direction overall. Since 2008, we have seen fund values and pension values move steadily higher and higher without any real shocks to the system or significant market falls. But this time last year we had an enormous shock. It was unprecedented and for the first time ever we did not know how or if things would recover. Everyone has been reminded and become much more aware again that the stock market is a volatile entity, and markets can go more than one way.
Coupled with that, the onset of a pandemic - which no one would ever have predicted, even as a ‘known' market unknown - coupled with ongoing political woes has meant there is a need to focus on planning for a retirement that is flexible and will be able to meet retirees' short and long-term needs
Is there a need in 2021 to review client risk appetite or assess their risk and suitability for the areas they are invested in? Has this become more important?
Yes, absolutely. The review process is critical to maintaining a firm hold on clients' objectives at any time. But 2021 is a great opportunity to change things up because if you advised on a top of the range product in 2015, there is almost certainly a better version of the same thing out there now. In fact, competition and technology have seen charges drop dramatically, so why not help your clients take advantage of that?
The pandemic has also seen many individual circumstances change too, and many people are finding themselves in different scenarios that they had not imagined. Retiring earlier or later, for instance. There will almost certainly be new and more flexible products to suit them in the market today.
Click here to access the full article in our Remodelling Retirement guide, which explores the changing nature of retirement in a post-pandemic world and asks advisers the key opportunities and challenges facing them in 2021.