How do we get clients over the often held view that pensions are “rubbish”?
A by-product of the product lead sales approach, is to focus on the “thing” not the outcome – “I’ve ruthlessly and with malice aforethought, researched the market and have selected Split Pea & General as having the best pension product for you…”
Even writing this leaves me stone cold, imagine it from your client’s point of view.
We’re totally committed to cash flow modelling as the correct approach when visually demonstrating financial planning to clients here. The more we use the cash flow models with clients, the more obvious it becomes that once you demonstrate that a pension is just an income with a different name, all the scales fall away.
People get the picture pretty quickly when they can “see” what a pension can do for them and get the tax advantages too.
Rather than focus on the swamp that pension income options can be, we tend to talk about Multiple Income Streams that are required when you decide not to work anymore (not retire) and how to put these building blocks in place.
We have found that having the client’s focus more on how much they need by way of fund or income when they stop working, tends to work better.
We set out a program in which the clients use all the tax wrappers (Pension, ISA, OEICS,Bonds etc) in an appropriate time and manner for them and this ensures that the we are able to use the Multiple Income Streams to create the tax optimised replacement for income in retirement (there, I’ve said it!)
We don’t dumb-down the detail but once we’ve established the high ground its an easier conversation. We also work hard in not overloading on tech talk or jargon when discussing the nuts and bolts.
A form of Plain English if you will and it’s always good to ask a client to briefly explain back to you what you’ve discussed and find that a good understanding have been established.
If not, I would always go back and cover the areas of difficulty again.
It’s never to patronise, but more for my peace-of-mind that I’ve been able to get the information required across to the clients in order they can make the correct decisions for them about the advice being offered.
We also use our cash flow software to demonstrate the way income will be delivered to them and the likely tax treatment.
It pulls together the concept of the Multiple Income Stream theory and the notion of a controlled replacement for income once you stop working.
You might even think pensions aren’t so bad after all.
None of this is new, earth-shattering or dangerous thinking, but then again providing sound financial advice doesn’t have to be complicated.
Roland Oliver