Case Study
Mr Davies from Falkirk wanted advice on whether to continue contributing to his current investments in the present climate but also to assess his pension fund as he intends retiring next year.
The Problem
Investment returns are down and as the client has 12 months before he retires, should he continue making a regular contribution to his investments. Also, being in a Final Salary Scheme, his pension statement gave 2 clear options: Take his tax free cash and a reduced annual pension or give up the tax free cash for an increased annual pension. Client was not sure what to do in this case.
The First Meeting (Discovery)
Prior to this meeting, I had posted out to the clients a short questionnaire that I needed filled in and returned to me which provided personal information such as name, date of birth etc to save the clients valuable time when we met. I then arranged to meet up at a time and place that was convenient to the clients for our “Discovery Meeting”. This is where we only talked about the clients and their hopes, dreams and ambitions and no mention was made of pensions or investments at all. This is an opportunity for the client to let me know exactly what it is they want to achieve in the future.
I left the clients a questionnaire to complete and return showing what their annual expenditure is and took away all the paperwork on each of their financial products to prepare for the “Truth Experience”.
The Second Meeting (The Truth Experience)
This is where I show the clients what their financial future looks like on a year by year basis. I use all that they have accumulated to date, less what the expenditure is and roll this forward for each year past retirement age right up until age 100. I am trying to show them exactly when and if their money will ever run out if they live the life that they want to live beyond retirement.
I also present different scenarios to show, what impact taking the Tax Free Cash Lump Sum makes on their financial future and compare this to not taking the lump sum. By showing the clients there and then a snap shot of their financial future and being able to see how good/bad it looks, really allows the client to focus on their lifestyle beyond retirement. It is easy to then demonstrate how vital the investments that have been accumulated to date are and why they should be continued.
The Third Meeting (Implementation Meeting)
This is where we meet again at the client’s convenience, to put in place anything that needs implemented as a result of “The Truth Experience”. In this particular case, we decided to change the investment style of the funds and re-arranged them in line with specific asset allocations, borne out with details discussions to ascertain the client’s attitude to risk. I then monitor these funds on the client’s behalf and report back on either a half yearly or annual basis.
The Sat Nav Meeting
We agreed to meet again in 12 months time to review the progress. Prior to this meeting, I will ask the client to update the Expenditure Questionnaire completed originally and present an updated “Truth Experience” to make sure 12 months on, the clients are still on course to achieve all that they want to, based on current information. If they have any changes to make, then this can be filtered in and we are always bringing them back on course to help them get where they want to go.
The Service
This is a unique and exhilarating experience that the client had never experience before with any other adviser. There is now a comprehensive and tailored Financial Plan in place. The result is a clear way forward, financial peace of mind and the achievement of their retirement dreams, without ever having the fear of running out of money.
