Advisers will not always be the person telling the clients what they want to hear, but ultimately they help them get closer to achieving their retirement goals and making a difference to their financial comfort, particularly in the later years of their retirement.
2. Planning for lump sums
Whether clients wants to pay off the mortgage, have the holiday of a lifetime, or provide a financial gift to their children, planning how these kinds of ‘one-off’ sums can be withdrawn in the most tax efficient way is vital.
While the pension commencement lump sum offers a tax-free threshold, further funds might need to be drawn from other wrappers as a top-up depending on the size of lump sum required. This is where some tactical tax planning comes in, and knowing their tax position and any tax (and product) charges the client may face from doing the withdrawals from any wrapper will be crucial in order to retain as much of the clients’ retirement funds as possible for future expenditure and income.
Getting a clear picture of any of these potentially large expenditures will help advisers to make better informed decisions and offer stronger advice.
3. Locking in income
For many clients, securing a regular and reliable income over the long term helps them feel more comfortable about their future. This could very well involve buying an annuity or de-risking a client’s portfolio. For some, there may be specific desires to de-risk by going into cash, and recent world events may have sparked this even further.
Some platforms offer cash solutions to help manage for long-term income requirements, not just in the form of funds but in fixed-term deposit accounts, all while still being protected in the Sipp wrapper.
4. Tailoring your investment strategy
After establishing the client’s circumstances and desired lump sum requirements and long-term income, this may trigger an adjustment of their portfolio.
As mentioned previously, derisking may be a first port of call depending on requirements, but either way advisers may look to other investment vehicles to help with the retirement strategy. This might include the fixed-term deposit accounts previously mentioned, using discretionary fund management, or even having access to whole-of-market trading.
Using a platform that offers multiple wrappers, but also a wide range of choice in investment options for the tax-wrapped Sipp and Isa vehicles could make this task a whole lot easier.
5. Establishing withdrawal strategies
I mentioned previously about considering the most tax efficient way to withdraw in retirement, whether it is taking that lump sum or the income, and it brings up an age-old debate: pensions vs Isas.
