Now that the dust has settled over Pension Freedoms, how can we help clients deal with their confusion, and make an educated decision about which route is best for them?
For many, Pension Freedom seems to have created more confusion than clarity. 7 months of largely negative media frenzy about Lamborghinis and bankruptcy later, are clients really any better informed than they were when the changes were announced? If not, how can we help them to understand what may well be one of the most important decisions of their lives?
FSCS levies are soaring as a result of claims relating to transfers of DB schemes, and to drawdown pensions. To an extent, this reflects the state of financial markets over the past few months; however there is still a clear indication that advice in these areas needs to be transparent and without room for misinterpretation.
But surely the word ‘Freedom’ should have generally positive connotations? From 1921 until 2011, the annuitisation of pension funds was effectively mandatory. Clients (and their planners) now have options and opportunities available to them which have been off-limits to investors for almost a century. The risk of reprisals shouldn’t restrict the options which you are prepared to present to a client, or influence the range of choices available to them when making decisions which will affect their entire financial futures.
Prestwood’s Truth® Software allows you to model the outcome of these key life decisions, and illustrate them using our Lifelong Cash Flow chart. It allows you easily to compare the effects of, for example, drawing down on a pension fund rather than annuitizing. We also provide you with the tools to discuss the client’s Capacity for Loss, and to illustrate the impact of Sequencing Risk, or a potential market fall on their cash flow picture.
Prestwood enables you to produce transparent, tailored recommendations which highlight the potential risks to your client, and create an audit trail to evidence the suitability of your advice. This leaves you free to spend time engaging with clients, and making those challenging decisions together.
If you’d like to find out more about Prestwood® Software, please call us on 01384 273736, email miles@prestwood-group.co.uk, or visit our website.