Andy McCabe, Managing Director at Selectapension, says this year's Budget could turn out to be a make or break opportunity for UK advisers
The pension reforms announced in last month’s Budget should see clients of all ages become more tuned-in to professional financial advice. New internal data from Selectapension has found that the average age of a client is 46, revealing a key opportunity for advisers to engage with a younger client base.
Research consistently shows that younger generations do not pay enough into pensions1. Despite auto-enrolment, many young people are not contributing enough into the pensions started by their employers, ignoring the reality that many will be working past the age of 70. Therefore advisers have a crucial role in working with younger clients to help educate them on the retirement-planning journey. This may be a change in approach for many advisers as most clients are traditionally in the middle-age bracket.
There are clear gains for the adviser community from working with younger clients too. Selectapension’s data reveals that 25 year olds can expect to see their salaries soar by the time they reach the grand age of 34. In 2013 an average 24 year old earnt £25,762. By comparison, the average 34 year old earnt £46,221, a 79% increase in salary. This rapid wage rise was also reflected in data from the past five years as 25-34 year olds can expect to see a 48% rise in salaries across a nine year period. Consequently advisers that engage with younger generations now can build relationships with clients who have healthy income projections and will therefore need a trusted adviser to help plan their finances.
In addition, research has shown the average person underestimates their life expectancy by five years2 highlighting that advisers can carve themselves a role to play in financial education for the long-term.
“This year’s Budget is a great nudge for people of all ages to think about the financial support they will need in the future.
“The industry needs to be ready to work with younger clients so they can continue these relationships as their clients move towards retirement. With the Chancellors’ announcement that everyone will have access to some free financial advice pre-retirement, advisers need to adapt and capitalise on the younger client market. Utilising technology such as Selectapension calculators can help advisers save significant time when planning their client’s retirement funds. ”