Advisers need to help workers & retirees fight inflation impact

As inflation continues to bite, forcing workers and retirees to make “tougher-than-ever decisions” in relation to retirement planning, advisers must step-up with joined up life-stage advice strategies, warns the Director of one of the UK’s leading national retirement advisory organisations.

The stark warning from Maxine O’Hanlon of OneYou, a trading style of WPS Advisory, which is appointed as the trusted adviser by some of the largest schemes in the UK to provide retirement planning advice to members and employees, comes as the latest inflation reading is published on Wednesday.

The annual rate of the UK consumer price index (CPI) declined to 10.5% in December – very slightly lower than the 10.7% in November.

She observes: “It’s the second consecutive inflation slowdown from the 41-year peak of 11.1% in October.

“However, due to the relentlessly and sustained increases in prices, with particular impact arising from the cost of energy and food, it is going to remain a critical, painful issue for the foreseeable future.

“Inflation isn’t just ‘economic data.’ For both workers and retirees it can be detrimental to their retirement savings, opportunities and ambitions.

“The ongoing sky-high inflation, which seemingly has a stranglehold over the UK, is forcing them to make tougher-than-ever decisions over their futures.”

Maxine O’Hanlon continues: “In this unforgiving economic and financial environment, as advisers we need to help workers and retirees make informed decisions, or they could face the very real possibility of being forced to ‘downsize’ their retirement plans.

“How do we do this? By reducing the barriers to talking to us, building trust and empathy – and showing that we understand and care is a foundation for that trust.

“From there we can build on life-stage advice strategies to help them successfully navigate these tricky and consequential decisions.”

When you are facing losing what you have worked hard to build, it creates “vulnerability and causes issues with decision making,” says O’Hanlon.

Those who are still accumulating savings, may find themselves in a conundrum – ‘do I stop saving for the future so I can continue to afford to look after my family today?’, in other words ‘put off tomorrow’s problem to another day.’

Or ‘do I make sacrifices now in the knowledge that I will continue to be on track to meet my retirement goals?’

A tough decision and, for many, savings for the future will be impacted.

Those who are nearing retirement or in retirement, do not have the advantage of time to make up gaps in savings and, coupled with decreasing values owing to market and economic conditions, their pension and savings pots will be impacted. There is a risk that many will run out of their savings sooner than they thought in retirement.

“This is all a considerable worry and forces many to make emotional rather than informed decisions about the future, creating vulnerability and many will find themselves targets of scammers promising higher investment returns, more income and, more access to lump sums,” notes Maxine.

This greater vulnerability means there is a “greater need for financial advice than ever before.” Since 2015, WPS Advisory has engaged with more than 100,000 consumers and created an unparalleled record when it comes to delivering properly tailored, appropriate, financial advice.

As recognition of its work, WPS Advisory, a wholly owned subsidiary of deVere Group, was named ‘Best Retirement Advisory – United Kingdom 2022’ by Pan Finance International in their prestigious annual awards.

Maxine concludes: “This once-in-a-generation inflation environment is an opportunity for advisers to showcase the real, tangible benefit we can provide to clients.”