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Bankhall Conference 2009 - Just Retirement


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A decade of unprecedented opportunity

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Bankhall Conference 2009 - Just Retirement

  1. 1. Just Retirement<br />Holistic planning for Baby-Boomers<br />Plan Today, Profit Tomorrow<br />For Intermediary Use Only<br />1<br />
  2. 2. Agenda<br />The baby-boom generation<br />The changing nature of retirement <br />Pensioner assets and incomes<br />Holistic Retirement Advice<br />Annuity information<br />Equity Release<br />2<br />
  3. 3. Ageing in the UK population<br />3<br />Source: ONS, 2008<br />
  4. 4. Demos: The New Old<br />Baby boomers at forefront of radical social, economic and political change<br />within the family, <br />within the education system, <br />within the labour market, <br />and beyond. <br />Dramatic impact in later life.<br />Retirement could become a very liberating space<br />Self-employment among older people has increased significantly in the last two decades. <br />5 per cent in 1978 <br />12 per cent in 1999. <br />50.5% would ‘rather be a self-employed entrepreneur’<br />Source: Demos:The New Old, 2003<br />4<br />
  5. 5. Baby boomers<br />Insurgent<br />Liberal<br />Individualist / non-conformist<br />Counter-culture<br />Less deferential<br />Less trusting of those in authority<br />More hostile to organised religion<br />More control<br />Consumption<br />More comfortable with debt<br />5<br />
  6. 6. Retirement assets becoming more complex<br />Demise of guaranteed predictable pensions <br />Increase of multiple DC schemes <br />Increase of non pension assets in place of some pensions savings<br />Main residence / Second or more properties<br />Shares and collective investments<br />Investment bonds<br />Deposits and related bank savings<br />National Savings<br />6<br />
  7. 7. Risks increasing and complex<br />Longevity<br />Asset allocation and market volatility<br />Inflation<br />Morbidity – costs and impacts<br />Care<br />Inheritance matters<br />Advice at- and in-retirement in short supply<br />7<br />
  8. 8. Nature of pension provision is changing …<br />8<br />Source: GAD/ONS 1979-2007<br />
  9. 9. Pensioner incomes vary widely<br />Breakdown of pensioner incomes<br />9<br />Source: Pensioners Income Series, DWP 2006-2007<br />
  10. 10. Annuity sales by premium - 2008<br />96% below £100,000<br />Number of Contracts<br />Fund Size<br />Source: ABI, Q4 2008<br />10<br />
  11. 11. Retirement<br />30’s 40’s 50’s 60’s 70’s 80’s<br />Net Average Personal Wealth<br />Asset <br />Accumulation<br />Asset <br />Decumulation<br />Protection<br />3 Primary Needs<br />Accumulate effectively<br />Protect efficiently<br />Decumulate effectively<br />11<br />
  12. 12. Retirement advice is a very broad field<br />12<br />“Help me to understand and address my financial risks in retirement”<br />
  13. 13. Possible retirement advice business<br />Ages 55 and above<br />Assets (excl. property) £100k to £1m<br />Wealth Management<br />Divorce<br />Investment <br />platform<br />Tax<br />Portal / assisted<br />purchase<br />Outsourced or<br /> referred<br />Estate planning<br />Thru-retirement Planning<br />Risk <br />profiling<br />Asset <br />Allocation<br />Fund <br />Selection<br />Portfolio<br />Management<br />13<br />
  14. 14. General Advice Business<br />14<br />250-500 clients per adviser<br />Relationships<br />Sales<br />Co-ordination<br />General Advice<br />Low Cost Delivery<br />Outsourced / Referred<br />
  15. 15. Consumers need more information<br />Many don’t understand they have to annuitise<br />Unaware of shopping around and OMO<br />10% could describe annuity accurately<br />Annuity features and choices not understood<br />Security and guarantees a priority<br />Decisions won’t be made quickly<br />Many would use web to research, plan and decide<br />Need validation<br />Help to understand options is poor<br />Need to understand impact of choices as they make them<br />Source: Just Retirement, 2008<br />15<br />
  16. 16. Opportunity to work together<br />16<br />Recent and continuing activities by the FSA put annuity provision under the TCF spotlight<br />Many advisers and providers will be reviewing where this fits into their strategy<br />Many will have issues with the ongoing provision of annuity advice including<br /><ul><li>TCF and Regulatory Risks
  17. 17. Profitability
  18. 18. Longevity risks
  19. 19. Investment management
  20. 20. Administration</li></ul>There is a range of solutions available to advisers. <br />
  21. 21. How are People Using Equity Release?<br />Clearing Debt - loans, credit cards & mortgages<br />Gifting - pay for grandchildren education, help them get on property ladder<br />Increase income, augment pension, meet standard of living requirements<br />Home Improvement - repairs, maintenance, extension<br />Home buying - for new home or second home<br />Leisure & holiday - new car, cruise etc.<br />17<br />Source: JRS use of borrowing, 2009<br />
  22. 22. Equity Release – The Opportunity<br />Growing retirement sector<br />Increasing need for improved financial management in retirement, <br />Equity release allows customers to realise the value of their property for a better retirement<br />Opportunity for companies with right proposition to offer equity release <br />Provide an increasingly important added value service<br />High level of interestand people researching<br />18<br />
  23. 23. Equity Release – The Opportunity<br />Number of ways to introduce equity release into portfolio of products <br />Qualification<br />ER1 counts towards Diploma at certificate level<br />Natural extension for mortgage qualification<br />Equity release isn’t only about major purchases<br />Help pay for other key services i.e. <br />domiciliary care, <br />private medical insurance premiums, <br />debt refinancing, <br />monthly income<br />It can change lives<br />19<br />
  24. 24. Summary<br />Growing segment<br />Growing risk and confusion<br />Variety of emerging needs and circumstances<br />Variety of potential business models<br />Opportunity<br />20<br />