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Much has already been written, with no doubt lots more to come, about the huge gap that exists between the amount required, or at least deemed desirable, to afford a dignified retirement, and the situation that many people face in reality.
Individual advisers and planners no doubt have a good track record at getting those clients with whom they can & choose to engage, to take the right steps i.e. winning the individual battles. What about all the others with whom we can’t or don’t engage? That’s where the war gets lost. Even with the engaged client success stories, there is probably an even better job could have been done, if all of this had started so much earlier.
In his recent article in Adviser Lounge, Phil Young wrote a great piece which posed a number of questions. This is entitled… “Are we really interested in answering the big questions?” So if you haven’t read it, I’d like you to go and do that right now (read the responses too)………..
………….OK are you back? I think you’ll agree it’s a really thought provoking one, even if almost a little despairing towards the end. Maybe Phil’s right though, maybe that is just being realistic. Go further, and in Benjamin Fabi’s response you get one very honest (and disturbing?) assessment of perhaps why at least one group of people are unlikely to feel inclined to save.
Why is this happening?
What needs to be done to stop this cycle continuing?
Who is going to do something about it?
Why? ….there can be many reasons but likely to include:
Unaware of the real situation facing them personally
Believe state will provide adequately.
Believe their employer is providing adequately.
Unaware of how they can improve the situation, by taking personal responsibility.
Really can’t afford to make personal savings.
Think they can’t afford to make personal savings.
Choose not to make personal savings.
Think that it’s a genuinely futile exercise.
What?
Ideally everyone needs to be faced with a realistic simple picture of their income for the rest of their lives. This would need to be done with no alternative agenda, i.e. no expectation of product sale or commitment to pay for an ongoing service. It would just show a snapshot picture & projection. It should be done as early as possible (first job?) and as often as reasonable (annually?) thereafter. Everybody would have one, and realistically it also does probably need to be able to be accessed at nil cost.
Who?
So who is going to provide this service? If all we are really concerned about is winning the war, we shouldn’t care, as long as it gets done and is understood. People need to see their own picture develop over time and see the effect, as each year goes by, that they have made a choice to not address the increasing gap. It shouldn’t then come as a “big surprise” on or near to retirement.
At this stage I think it’s worth accepting that as most of the readers of this article will probably be financial advisers/planners, or otherwise have a vested interest in some form of financial services business success. If so, you may be losing interest in answering the big question. This is where I understand Phil’s point about “not being any different myself”. How realistic can it be to suggest that a cash flow model (even a basic one) can or should be provided free of charge? The answer has to be that it’s not reasonable to expect that advisers/planners can do all of what’s needed. They have a part to play but are almost certainly not the whole answer.
So what are the answers to the above questions, particularly the “Who”? Clue, it needs to be from an already trusted source, with a genuine passion about changing the current situation. They also have to be prepared to commit year by year funding to get the message out.
Mmm.. That maybe narrows it down a bit, but let’s at least start throwing ideas about on this. I’m sure collectively we have the ability to come up with some real original thinking that is probably unrelated to our own day to day personal business agendas.