In the Chinese animal zodiac 2020 is the year of the rat and what a ratty year it has been! Who at the beginning of the year would have predicted how devastating the coronavirus pandemic would be?
The ensuing health and financial crisis was a ‘Black Swan’ event on a global scale and the misery caused will have a long-lasting effect on all of our daily lives and our personal finances. But hopefully now the vaccine is being rolled out lives will start returning to the new normal, whatever that may be, in 2021.
When I look back on 2020, I think we at Better Retirement, like many other advisers, can hold our heads up high because we have served our clients well and helped them through the most difficult of times.
The Happiest Man on Earth
I listened to an inspiring radio interview with Eddie Jaku who has just written a book entitled “The Happiest Man on Earth”
Eddie has just celebrated his 100th birthday which is amazing considering he survived the horrors of Nazi concentration camps and was rescued by American soldiers.
While he was recuperating in hospital he vowed that if he survived he would be the happiest man on earth and he would be helpful and kind, everything his captors were not.
I think we all can all learn a lot from Eddie's approach to life especially as financial happiness should be the most important goal for everybody.
The Case for Annuities
The case for annuities can be made very simply; they are the only policy that pays a high level of guaranteed income for the rest of your life. In this sense an annuity is a pension, and in the rush to introduce pension freedoms it is easy to lose sight of why you probably saved for a pension in the first place.
Annuity rates may be low at the moment but they are the only way of guaranteeing a regular income for the rest of your life with peace of mind and security no matter how long you live.
It is an understatement to say that life will probably not be the same again and we will have to change our behaviour if we want to stay safe and well. However, I think there will some positive changes to way in which we will advise our clients in the future: These include: .
Is it a good time to purchase an annuity?
“Is now a good time to purchase an annuity”?
The thinking was that now fund values have increased since the March 2020 crash it might make sense for some people, especially those with relatively small drawdown pots, to purchase an annuity.
I understand from several annuity providers that annuity sales have increased significantly so it will be helpful to see if there is a case for purchasing annuities at the moment.
Engage with advice
I want to help people make the right decisions at retirement but it seems many people don’t want to help themselves by properly engaging with advisers.
In the old days (whenever that was), people were more open to taking advice and more trusting of experts but nowadays many people have a closed mind to advice and don’t necessarily trust advisers. This has not happened overnight but has crept us on us over the years, but the lack of engagement has been accelerated by events such as RDR which created the so-called advice gap and by changing attitudes and customer behaviour.
The big picture – There is an advice gap and some people think the answer is robo advice
What's the problem? – Just like the exams, robo advice relies on algorithms but these can disadvantage those who are less well off
What can de done? – Looks at ways to get real people involved with the advice process.
Ali Hussain wrote a very good article in the Times newspaper on Saturday 18th July in which he highlighted the commissions paid on non-advised annuity sales
I helped Ali with this article by providing some annuity quotes and giving some comments.
The article explained how although financial advisers were banned from being paid commission in 2013, the ban did not apply to brokers who sell annuities and some types of pension drawdown without giving advice.