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Spotlight on: Financially Mature and Stress Free

Life stages for Financially Mature and Stress Free

Age 45

Age 45

  • Children

    • A young child in private education or in further education

  • Elderly Care

    • A parent that requires some care and support

  • Financial

    • Paydown their mortgage which has five years remaining

    • Savings of £100K

    • Group Protection with wellbeing support

    • Workplace pension

    • Adviser consideration

  • Adviser considerations

    • Pay off mortgage

    • Medium term investment

    • Life cover

    • Possibly consider transfer of defined benefit pension as client nears retirement age

    • Assist the funding of child’s education

Age 65

Age 65

  • Children

    • A child completed university but moved back to the family home.

  • Elderly Care

    • A parent that requires care - both emotional and financial support are required.

  • Financial

    • Working part-time such as consultancy work

    • No mortgage

    • More household expenditure

    • Investments worth up to £200K

    • Second property

    • Defined benefit pension of £500K

    • Significant Inheritances

  • Adviser considerations

    • Estate Planning

    • Medium term investment

    • Gifting to help child onto property ladder

    • Inheritance tax implications

Age 85

Age 85

  • Children

    • Grandchildren.

  • Elderly Care

    • Personal Long-term care needs.

  • Financial

    • Trusts for grandchildren

    • Self-funding for care

  • Adviser considerations

    • Property adaptation

    • Self-funding for care

    • Mental Health implications

    • Inheritance tax implications




Adviser Considerations at 45

Defined Benefit pensions

Up until the 1980s defined benefit pensions were the most popular retirement plan offered by employers. Over the last few decades, employers have increasingly stopped offering these pension plans as the costs have risen, causing them to gradually phase out. The impact of this means many employees will shift to a defined contribution pension where they control how much to contribute and how the money is invested.



Transferring Defined Benefit pension schemes

Your client can transfer the defined benefit pension scheme as long they are not already drawing from it. Defined Contribution pensions can be accessed flexibly from age 55 so this might seem like an attractive option

It’s important to understand the pros and cons of transferring the scheme as many clients will be better retaining their Defined Benefit pension. Things to consider will be how you can safely be involved in this market, the impact on professional indemnity insurance and what alternative solutions are available which can reduce the risks of transferring



Offshore Savings Account

If your client has money to invest, a flexible, tax-efficient way to build up savings could include an Offshore Savings account. There’s no limit to the amount they can invest and extra payments can be made as and when required. This account could be ideal for anyone who’s already used their ISA or pension allowance and wants to invest in a tax-efficient way.



Life Assurance and Critical illness cover

Life can be unpredictable but by forward planning for your client you can bring them and their family peace of mind and protection against life’s uncertainties. Generally, the proceeds of these policies are tax-free to the beneficiary.

Life insurance plus Critical Illness will protect your client and their family and bring that much needed peace of mind. Your client gets the benefits of life insurance plus additional protection if diagnosed with a specific illness. Full cover offers up to 52 core illnesses, part payment for additional 44 illnesses and automatic cover for children up to 18. Lots of cover options give your clients flexibility and free access to a range of support services make this cover invaluable.

Bereavement counselling and a Probate helpline give emotional and practical support to the family at a difficult time. The client can also benefit from a personal nurse service and a second opinion on their medical diagnosis.

Key person cover

If your client owns their own business or co-owns a business, then life insurance and critical illness can help fund any buy/sell agreement in the event of an owner’s sudden death or illness. For a family business, a Group Life policy can insure the main person in a small business, usually the owner, founder or key employee. This protects the business from going under in the event of losing a key person before a replacement can be found. In addition, these types of insurance policies premiums can usually be deductible as a business expense.




Adviser Considerations at 65

The Retirement Account

The biggest financial challenge of retirement is, and always will be, income. Most conversations about retirement will be about income. How to build up a big enough retirement fund while working, and how to generate sustainable income from it when retired or phasing into retirement.

In the background there is the massive challenge advisers face of generating income in what seems to be a permanent low interest, low inflation world – including the gap between clients’ expectations and the reality of the income that can be generated from a given pension fund. The Retirement Account (TRA) excels in the areas of income flexibility, income security and income sustainability

Key Points

  • Income to fit individual circumstances such as topping up lower employment income from going part-time or taking a less stressful job

  • Topping up unpredictable income – moving into consultancy, contracting

  • Temporary periods without income – redundancy, sabbaticals, serious illness (all more likely once people get into their 50s)

  • Personalised pension income – different pots or income streams becoming accessible at different times leading up to state pension age, use of tax-free cash

The Retirement Account is a pension solution designed with flexibility in mind. Your client can use it to consolidate their pension pots, make regular or one-off contributions, grow their savings and take retirement benefits at retirement.

Flexible options

There is control over where your client wants to invest their money because you and your client can select from a wide range of investment options. Choose to take pension in one go, phase retirement over a few years, take a tax-efficient income, access tax-free cash and provide for loved ones.

When your client retires, they will have the flexibility to control the type of income they want. Whether it’s a guaranteed lifetime income, a flexible drawdown income, or a combination of both. They can change their income choice as and when they need to.



Estate Planning

It is important for clients to plan how they want their estate to pass on, both during their lifetime and what happens to it when they die. This can ensure the right people benefit and maximise the amount available to them. It can also take into account the management of an individual’s properties and financial obligations in the event that they become incapacitated.

Assets that could make up an individual’s estate include anything they own, such as houses, cars, cash and investments, along with things that they benefit from, such as some trusts. Your client may have various reasons for planning, such as preserving family wealth, providing for a surviving spouse and children, funding children’s or grandchildren’s education, or leaving their legacy behind to a charitable cause.

The most basic step in estate planning involves writing a will to ensure executors are appointed to direct the estate to the right people, along with specifying guardians for minors. Other potential solutions include setting up trusts for suitable beneficiaries, updating plans on life insurance, funeral arrangements, establishing annual gifting and setting up a power of attorney to allow someone to manage affairs if the client is unable to.



Gifting wealth

Lifetime gifting can be an effective way of reducing the value of an estate and generally someone is able to gift what they like providing that they survive seven years.

Gifts can either be made to individuals or into a trust arrangement which can provide flexibility regarding future beneficiaries, access for the client and control over who benefits and when. A trust can also provide some level of access for the client, to either the growth, the capital or both. However, excessive lifetime gifts to certain trusts can incur an inheritance tax charge of 20% at outset. It is important that clients speak to an adviser to understand the implications of any gifting they make or plan to make.



Life Assurance

Where a client is unwilling or unable to make any gifts, they can use life assurance as part of their estate planning. A suitable policy can be arranged to provide the beneficiaries with a lump sum in order to pay some of all of the liability that arises.

Also, if there are sizeable gifts that could generate a Inheritance Tax liability should the client die within seven years, a suitable life assurance policy could provide financial security for the client and recipients of the gift.



Passing on wealth

Many clients are becoming much more financially aware and more interested in passing their legacy to their families in the most tax efficient manner whilst they are still alive. This includes ensuring that they use available gift allowances, maximising pension contributions while still working and utilising trust planning.

Reducing the tax payable means that a larger amount could be available for the beneficiaries.



Equity Release

Equity Release can be used for clearing debt such as loans or an outstanding mortgage balance. It also supports the trend to gift money for weddings, house purchases or university fees to see the benefit it makes instead of it becoming part of inheritance given after the death of a client.

In addition, the over 55s can unlock tax-free cash from their property, with flexibility over the amount they can borrow and whether any repayments are made.

There are two types of equity release: lifetime mortgages and home reversions. Both types allow you to stay in your home and release a lump sum of cash from the equity (value) stored in your property. However, unlike home reversions, lifetime mortgages enable you to retain ownership of your home. We offer a range of lifetime mortgage products that suit a wide variety of needs.

Share our Equity Release explained guide with your clients which covers any concerns your clients may have and simplifies the product and the process.



Considerations at 85

Protecting wealth

Every client looks to protect their wealth and make it as tax-efficient as possible. Making sure their will is up to date to pass on wealth and mitigate inheritance tax and the pension expression of wishes form is completed are basics on the to-do list.

You could consider annual lump sum gifts to use up their allowances and consider making selected transfers. These will fall out of the client’s inheritance tax calculation if they live for seven years from making the gift.



Care home costs

Another concern for many clients is how to protect wealth when selffunding in the event of having to move to a care home in the future.

This is a common concern for clients as they wish to protect their hard-earned wealth whilst paying for care home fees. A suitable investment or trust can provide the ability to help plan for these costs.



Vulnerable clients

Personal relationships will always be a vital part of the advice process. A strong personal relationship is a key cornerstone of a good service and will be so for as long as the profession exists.

In the current climate, easing the weight of clients’ financial stresses will be crucial when many may be feeling profound uncertainty and vulnerability in areas of their lives. The value of advisers who had close relationships with their clients is now greater than ever.


Mental health

Research shows that around 15% of over 75s will experience some sort of poor mental health including depression or anxiety. Loneliness is often cited as a problem as increasingly these clients find themselves on their own more.

Volunteering time has shown to boost mental wellbeing which often peaks at age 65. The UK charity Campaign Against Living Miserable (CALM) can offer guidance and support if your client may be struggling and opportunities for volunteering their time.

More information can be found here: »

Cyber Security

Sadly, the elderly are a target for scams and are often vulnerable to financial fraud. Make sure your clients are aware of these 5 tips to help them stay safe

  • Make passwords strong and use a sentence that uses a mix of letters, numbers and symbols with no personal information.

  • Ignore emails or communication that creates a sense of urgency such a problem with their bank account or taxes. These types of messages are likely to be scam so make sure your client does not click on links

  • Enable spam filters on all email accounts to filter out any spam mail

  • Encourage your client to log out of any apps or websites when they are done using them to prevent any privacy risks.

  • Share with care when using social media. Remind your clients to adjust their privacy settings to limit who can see their information and avoid sharing location.



Adviser tools

These online tools are free to use and designed to enhance client engagement 

Life expectancy calculator

A useful tool t help find out your clients average life expectancy, so that you can help plan their future and retirement option.

Try calculator

The budget planner

This online tool looks at your income and outgoings to help your clients understand and manage their budget.

Try calculator

Customer support

Find answers to commonly asked questions, helpful links, tools and contact details.

Customer support