Family financial planning is the future, say advisers

04 November 2015

  • Pension freedoms will increase demand from couples and families for financial planning
  • One in three advisers saw a rise in couples and families seeking joint advice in the last 12 months
  • Two in five are already offering special services to cater for couples and families

Financial advisers expect the number of couples and families seeking joint advice on retirement planning to increase as a result of the recent pension freedom rule changes, according to new research by Prudential1.

Advisers estimate that couples already make up more than 40 per cent of their client base while wider family groups account for 17 per cent. However advisers expect these figures to rise as a result of pension freedoms – two thirds (68 per cent) expect to advise more couples in the future and nearly half (46 per cent) expect more family groups.

In fact the insurer’s research results suggest that the pension freedoms may have been having an impact on the numbers of couples and families seeking joint financial advice even before they came into force in April this year. One in three (33 per cent) advisers reported an increase in couples and families in their client base over the last 12 months.

The changes to pension rules that were initially announced in March 2014 and came in to force in April 2015 not only enabled access to defined contribution pension savings lump sums for those over 55 as part of the increased flexibility, but will also allow many savers to
pass on their pension pot to others tax free for the first time.

When asked to predict which aspects of financial advice would become more important to families and couples in the light of the new pension freedoms, advisers highlighted inheritance tax planning, tax minimisation and planning for retirement income as the most

Vince Smith-Hughes, retirement income expert at Prudential, said: “Advisers are telling us that the shape of their client base is changing. Best practice in retirement and legacy planning has always been for couples to make well informed joint decisions. But recent changes mean that for some people it’s now also important to involve their wider families in the planning and decision making process.

“The choices now faced by those who have saved through their working life and the implications of these choices mean that, more than ever, professional financial advice should be a valuable part of retirement planning for most people. The free and impartial guidance available from the Government’s Pension Wise service should also prove extremely valuable to anyone over the age of 50 with defined contribution pension savings.”

Billy Burrows, an independent retirement options expert, said: “The pension freedoms put people in control of their pension pots and they can now take income or cash in any way they wish at any time after the age of 55. One of the most far reaching changes are the new death benefits which allow pension pots to be transferred to any number of beneficiaries, which means that pension funds can be passed from one generation to another.

“However, with freedom comes responsibility and individuals owe it to themselves and their family to get the best possible help and information before making very important decisions about how best to use their pension pot. With this in mind, it is no surprise to see financial advisers gearing up to be ready to help more couples and families make the right financial decisions together in the future.”

Nearly 50 per cent of advisers believe it is good practice to encourage partners and families to seek advice together. Looking to the future, just over half (53 per cent) say joint financial planning will become more important and 39 per cent say they have already developed special services to meet the increasing demand.

Notes to editors

1 Research conducted among a panel of 119 financial advisers between 4 and 12 August 2015 by Citigate Dewe Rogerson on behalf of Prudential.

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