“I have retired now, my life is less complicated, so do I need a financial planner in retirement?”
The simple answer is… yes, you do.
This is a question that we hear regularly at Capital. It is relevant to so many retirement-age Baby Boomers.
In the spirit of candour, and based on 40 years of working with clients, what follows are our impartial observations. This is based on first-hand experiences with hundreds of families who have reached retirement age.
You will fit into one of these three categories:
1. You haven’t used a financial adviser before to help you with your finances
2. You used to work with a financial adviser
3. You have an ongoing working relationship with your financial adviser
On the basis that you are near retirement, you need to make decisions. Whether you carry on as you are (categories 1 and 2 mean flying solo or taking up DIY finances) and if you are in category 3, carry on or stop.
Adulthood can be split into two neat halves to add some colour to the question.
The first half (the ascent)
Ages 20 to 60 have been the typical working life for most people. You work and strive, building a career, buying a house, raising a family, perhaps paying for quality education and enjoying a certain standard of living.
This entails managing debt, balancing income and expenditure, putting money away into a pension, saving for a rainy day and topping up ISAs annually. It is hard. It can be a tough climb. You need to be well equipped.
And one day, the striving is over. Enough money (you hope) has been invested to leave the workplace behind and your mortgage is repaid. The pension pot is bulging, your children have graduated and the new car on the driveway is finance-free for the first time. Your sights are set on a holiday home in Cornwall or Norfolk and everything looks good.
We have no idea if you have had professional help during this 30-year growth phase. In any event, most of those years may be behind you. You need to look ahead.
To return to the question: Do you need financial advice after retirement?
The second half (the descent)
The second half of life is the 60 plus stage, which is more aligned to spending.
This is where our Mount Everest example comes in.
For climbers, the summit of Everest equates to total achievement. This is the Kodak moment; climbers clad in their gear, smiling and holding a flag, ecstatic.
Our point is that summiting Everest means the climb is only half complete. The other, often more dangerous, half is all about returning home safely with all of your fingers, toes and your nose intact. Perhaps the happy smiling photo with the flag should be taken by the front door when home and safe.
Since 1921, 290 people have died climbing Everest. Of these, 71 died on the way down. This represents a significant 25%.
R Douglas Fields, chief of nervous system development and plasticity at the National Institutes of Health (NIH), says “That’s actually a common rule in climbing that more people die coming down than going up…You’re spent getting to the top. You get tired, you’re exhausted.”
A constant helping hand
All very interesting but what has this got to do with financial planning?
The financial planners at Capital are constantly reminded of the Everest example as people often believe that since they have reached their 60s and ‘retired’, the hard work is over. They can coast, unsupported and without help for three more decades.
Yes, they may have summited career-wise and can enjoy the panoramic view, but for how long?
There are probably another three or four decades ahead, and this second half can be more complex and challenging than the career ascent. From age 60 -plus, the world will throw a host of challenges your way.
This is not the time to be without expert help. This is the period of life when financial planning is most valuable and rewarding.
In our 40 years’ experience of advising and coaching people, clients move from an independent state to one of dependency.
The fear of loss
Having achieved so much in life, the overriding emotion is now the fear of loss. The conundrum being ‘How can we live our ideal life, safe in the knowledge that we will always have enough?’ Safety and fear of loss are key drivers. Like those climbers descending the summit of Everest, one wrong step, one poor decision, a wrong path, and all is lost.
This second half is a time of tough questions.
• Have we got enough income to meet our obligations?
• Will we run out of money?
• Can we afford to support our favourite charity?
• What happens if one of us needs long-term care?
• Should we help our children now, or later?
• Is our capital keeping up with inflation?
• Can we keep on having fun?
These are a few of the questions that clients ask us. They want us to be a sounding board for their ideas, to give an impartial second opinion, to guide and coach them with an experienced hand. In essence, their experienced Sherpa.
As people age, illness can strike out of the blue and blow plans off course overnight. What then? A new and unexpected challenge, and no life experiences to fall back on. There are choices and tough emotional decisions to be made; not the time to be alone without an expert guide.
Every family is unique, and this blog can’t be precise. Whether you choose to use the internet for guidance or even try robo-advice or adopt an ongoing DIY approach or pay for ad-hoc advice as and when you think you need it, these are your free choices.
Families facing a major issue can rarely resolve it themselves without help.
To conclude, if you have a financial planner it makes sense to remain engaged for the long term. Make sure that the financial planner you use has a succession plan in place for at least 30 years.
If you don’t have a financial planner, and this blog has given you food for thought, our chartered financial planners at Capital will be happy to help. Alternatively, the following resources are a good place to start: Adviser Book, Unbiased, and Vouchedfor.
Ensure that you shortlist a firm that is independent to avoid being restricted to certain financial products. If you would like to find out some more information, read: the top 5 things to know before selecting a great financial planner.
If you are still on the fence and wondering if a robo-adviser can do the job for you, take a look at this blog.
We wish you luck, fun and enjoyment in your later life. If you would like to discover how financial planning after retirement can benefit you and your family, contact Capital today.
At Capital we believe that all stages of life are important.
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