Our ageing population and financial services
WOODY Allen was talking about getting older when he said: “You can live to be 100, if you give up all the things that make you want to live to be 100.”
In Northern Ireland, it looks like we are doing just that.
As a nation who were expected to die at around 60 a century ago, we are now living well into our mid-80s, what with better medicine, better healthcare, and better nutrition making for healthier lifestyles.
Well, in this column it doesn't take me long to hit the figures, and in 2016 there were already over 36,500 over-85s in NI, according to the Northern Ireland Statistics and Research Agency (NISRA). Two-thirds of those were women. That's now 2 per cent of the population.
The financial services industry, however, is struggling to keep up, according to the Financial Conduct Authority (FCA).
Last week, the FCA's head of life insurance and financial advice said they were concerned that older consumers have neither the correct products, nor the correct advice for proper financial planning.
In fact, Linda Woodall said there was a real risk that older consumers' financial services needs are not being fully met, resulting in exclusion, poor customer outcomes and potential harm.
She added that older customers need products tailored to them, that the companies need to review how they engage with older customers, and they also need to better support them in meeting their financial needs.
“Older” is a vague enough term, and the FCA does not give a precise age threshold at which you enter its category of being older.
My personal definition of old is anyone older than me, but that's just a yardstick for my own use and besides, it changes every year.
I'm reminded of Roger Daltrey, singer with the 60s band ‘The Who', who wrote the famous line ‘Hope I die / Before I get old'. Well, Roger Daltrey CBE is still going strong at 73, and when asked about that line recently, he joked ‘I was young and foolish then'.
In general, I think we are safe to say that older customers are those who are in the critical years of pension planning and pension investment – which arguably would be anyone aged 55 and over.
All of the above points to the need for older customers to seek financial advice.
The FCA points out three key ‘trigger points' where consumers in this category need help: when contemplating retirement, when suffering a bereavement, and when working out how to fund residential care.
Which brings us to the crucial difference between guidance and advice.
There will soon be a new financial guidance body to replace the Pensions Advisory Service, The Money Advice Service and Pension Wise.
These will provide information on financial products and services. However it is generally accepted that ‘advice' is more comprehensive than just ‘guidance', and that the services of a qualified, independent financial adviser will be much more useful than a simple supply of information.
One commentator summed up the difference as follows: ‘Guidance tells people what they can do – while advice tells them what they should do'.
In other words, at its most basic, guidance may supply only brochures and website links, leaving the older customer to make up their own mind. Hence the risk of what the FCA called poor outcomes and potential harm.
But if you have a qualified adviser helping you to put together a financial plan, be it for retirement or anything else, that adviser is liable for the suitability of that plan, and will do his or her utmost to ensure that it is perfect.
Not only are advisers highly qualified, but they are required to keep their knowledge up to date in a structured way each and every year.
Old guidance brochures may age and fray - but independent advice is bang up to date.
So whether you are planning to live to 100, or just 86, it could be worth your while calling an adviser today!
:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005. Further information on Facebook at “Kennedy Independent Financial Advice Ltd”