Pensions reform will help financial planning take a step forward
UK pensions reform will see a focus on planning over product and the opportunity to address a wider audience, says Stephen Page, director, Page Russell
The biggest opportunity we look forward to in 2015 is the change in pension rules, which I believe will really help bring pensions to the foreground. For too long, financial advice has been product-led, but this change will allow it to become more planning-focused. It will take financial planning a step forward, as more people view pensions as an intergenerational and gifting tool.
Now that the hiatus of the RDR is behind us, there will be lots of new opportunities. Companies that will fare well are those that focus on service. Delivering consistent and reliable service to clients is vital, especially in times of change, and technology will play a key role. Clients increasingly want all their information in one place and by using apps and improved software, it will help client’s finances to become more visual.
Meanwhile, the challenge for 2015 will be the rise of VCTs and EISs as mainstream investment vehicles. There is no doubt they have their place in the market, but they are designed for a very specific investor and to be treated as mainstream is a frightening prospect. There is simply not enough understanding among clients of the potential losses; a combination of low interest rates and inflation means many investors are looking for something a bit more exciting and want to delve into more esoteric investments without fully appreciating the risk. Advisers have a duty of care towards clients and I fear these products could become a threat to good advice, especially if they start to enter the realm of long-term care planning.
The challenge clients face in planning for long-term care is the changing landscape. There is a great deal of misinformation around what you can and can’t do but we must ensure we advise them as best we can without allowing them to take unnecessary risks in the name of greed.
Overall, I expect 2015 to be an exciting year as there appears to be growing interest in financial planning and the opportunity for us to address a wider audience is fantastic.