Financial advice for older consumers: What IFAs need to know
By Kirsten Hastings, 23 Feb 16
Older consumers are a diverse population, with different beliefs, behaviours and needs, all of which affect the way in which they interact with money and financial services, according to a new discussion paper from the Financial Conduct Authority. So, what do IFAs need to take into account to meet their needs? Click through the pictures below to find out.
“The most obvious dimension of change is the emergence of an ageing society which places dependency ratios under pressure as the numbers of those in work relative to those not working decline. In this context there is a temptation to present increasing longevity as a problem for societies; however it is undoubtedly one of the greatest achievements of civilisation.
“The challenges are manageable and innovation in financial services is key. In England a newborn baby boy can now expect to live to 79.5 years (an increase of 5.9 years over two decades) and a newborn girl can expect to live to 83.2 years (an increase of 4.1 years over two decades).
“Individuals are expected increasingly to make provision for their own later life alongside, or in place of, collective savings vehicles. Meanwhile the decumulation phase no longer starts with the cliff edge of retirement, but is likely to involve increasingly a period of semi-retirement as people move to part-time working or shift to less demanding or more adaptable jobs while continuing to draw an income.
“The use of digital solutions, such as robo-advice, will be part of the new landscape. There are undoubted benefits from such solutions as customers become used to operating in a digital environment as the norm for service transactions.
“But the industry and the regulators must be mindful that some customers are unable to interact digitally with the financial services industry, and some may only want face-to-face or other personal interactions at certain moments of their lives.
“Developments in healthcare and lifestyle mean that although people may be living longer, a substantial period of this may be in poor health, requiring the funding of long-term care. Even for those who remain in robust health into old age there will still be some medical and support costs to be considered. These factors all provide opportunities to consider how to facilitate the transfer of wealth between generations in a way that meets customer needs, which will differ substantially.
“The issues to be considered for an ageing population are vast and complex and the key point for the FCA and other financial services regulators is where to modify the regulatory settings to balance innovation and consumer protection.”
