Retirement seems a long way off; until you realise that it’s not that far away. With this realisation, there often comes regret, fear and occasionally panic about the lack of any planning or saving strategy. In the words of Benjamin Franklin, “by failing to prepare you are preparing to fail” but when everyday expenses, mortgage, family and household costs are the priority, it is difficult for most of us to think about next month let alone plan for our retirements.
We’re not alone in worrying about the future, and this additional stress can have significant knock-on effects. As many as 1 in 6 people have suffered mental health issues as a direct consequence of financial worries[i], and 83% of HR professionals[ii] suggest that personal financial difficulties affect the performance of their employees. In addition, huge shake-ups in the pension sector such as Pension Freedoms have led to confusion rather than clarity for many[iii].
Our own research[iv] at Wealth Wizards has recently taken a deeper dive into these concerns, and we have been able to identify three key issues that are keeping the nation up at night regarding our financial future and specifically retirement:
- “I’m concerned that I won’t be able to retire when I want and will have to work longer”
The Wealth Wizards research found that the average employee has to work nine years longer and on average, employees don’t think they will be able to retire before 69. Moreover, 20% of employees feel that they will never be able to retire.
- “I’m worried that my pension pot is going to be inadequate when I retire”
56% of respondents to the Wealth Wizards survey wished they had added more to their pension when they were younger, including 45% of those aged 18-34. In addition, 2.75 million pension savers have ‘no idea’ how much income they will receive in retirement based on their pension savings[v].
- “I wish that I had better advice regarding my financial future but I can’t afford it”
Only 24% of employees are currently offered financial education by their employer while conversely over 1/5 of employers indicated that a lack of saving for retirement was the most significant factor affecting employee performance.
It is impossible to turn the clock back and reinvent a savings pot, but it’s not too late to revaluate your current financial plans. To do this, people need to access quality, reputable advice, and historically, this is where the nation has faced challenges; mainly because professional and fully-regulated advice has been considered the domain of the higher net worth individual. However, this is changing and financial advice is rapidly evolving due to increased innovation and technological developments across the sector. Through the introduction of roboadvisers, financial advice firms are creating new more cost-effective products that can now service larger numbers of clients regardless of their existing wealth status. Online fully-regulated pension advice solutions such as Wealth Wizards are delivering employees state-of-the-art financial advice for the first time, and employers are starting to realize that, by offering financial advice to their employees, it can make a real difference to their productivity and wellbeing. Many UK companies are already witnessing positive changes that financial education can bring about. For instance, following the introduction of a comprehensive financial education programme, M&S experienced a 35% increase in employee participation in the company’s save as you earn scheme in just two years[vi] . And the demand definitely exists. Our research shows that almost half of employees over 55 agree that employers should be required to ensure the financial stability of their employees in retirement. This increases to almost 60% amongst 18 – 34 year olds.
For those people who are worried that this might all be science fiction and won’t happen in their life time, it is happening already, and we are looking at significantly more changes to come within the next five years. As an expert recently commented; ‘in five years’ time, there will be few adults in the UK who haven’t come into contact with roboadvice, whether that’s an online interaction or speaking to an adviser who is supported by some form of automated advice software’. [vii] For example, Wealth Wizards, offers bespoke, fully-regulated low cost financial advice by combining financial expertise and smart technologies. Employees can access a realistic, personalised plan for their workplace pension through a number of tools, that work across mobile, tablet and desktop so that it’s more consistent, less expensive and lower risk.
Providing accessible, affordable advice for all will require team work and for employers to recognise that financial advice is no longer an add-on benefit, but an essential part of an employee’s relationship with their employer. With the advances in roboadvice and innovation in online advice provision, this is happening, but it’s just the start. Here at Wealth Wizards, we believe that everyone deserves a comfortable retirement, and a good night’s sleep, which is why we are working with an increasing number of employers to help the nation achieve their savings goals. For further information, visit our website https://www.wealthwizards.com
[i] 2017 Scottish Widows Retirement report
[ii] Society for Human Resource Management survey
[iv] Wealth Wizards research conducted by Cebr. November 2017
[v] YouGov Survey 2016, Aon Hewitt analysis
[vi] CIPD: Workplace Financial Education
[vii] Roger Portnoy, The Evolution of Digital Financial Advice in 2018.