“It’s often the biggest or second biggest line of someone’s wealth. So behind the principal private residence, their house, the next biggest asset is very often their pension. So therefore at every opportunity you’re sitting down, reviewing the client’s balance sheet, you need to be talking about the pension.”
Keeping track of scattered pensions can also help to reduce uncertainty. Two-thirds of non-retirees have more than one pension pot, according to Interactive Investor’s Great British Retirement Survey 2021, while one in 20 (6 per cent) did not know how many pension pots they had.
“We’re forever saying to people, make sure you know where all your pensions are, even if you don’t want to move them to bring them together,” says Trott.
“Make sure that everything’s up to date, that you’re getting the regular information. That’s the really important thing – the more information you get on a regular basis, then the less of a surprise any of this will be.”
Andrew Megson, executive chairman at My Pension Expert, agrees on the importance of regular interaction.
“You have to go back all the time, revisit the goals, revisit the circumstances, revisit your advice. That’s how any adviser should ensure that they keep the client outcome exactly where the client expects.”
As the age-old saying goes, the value of investments can go down as well as up, which can be evident when a pension pot is revisited.
As to whether a client sticks it out, Aaron Metcalfe, chief risk officer at My Pension Expert, says: “Each of our portfolios has a volatility range that we work within. I think if a client was outside of that range and was for a sustained period of time, that’s when an adviser might take action. If the portfolio is working within that range, that might be more evidence to stay the course.”
Regular reviews can also identify any underperformance at an early stage so action may be taken to improve the situation, Tait at Intelligent Pensions notes.
“This also means the client has time to come to terms with the reality of their situation rather than having to adjust their thinking at short notice,” she adds.
Meanwhile, in the lead up to retirement, Keith Barron, chartered financial planner at Beaufort Financial (Forth Valley), highlights the importance of knowing whether there are sufficient funds to produce the required level of income, as well as checking whether investments are aligned with the appropriate risk level for that particular life stage.
