Annuity, drawdown... do clients care? It's about the right outcome, not the product

For over two years, George Osborne’s fundamental pension reforms have been the talking point of our industry, but what do clients think?

Jan Kinghorn, Senior Financial Adviser at Investment Solutions steps back to look at the client perspective.

While we happily discuss ‘fixed-term annuities’, ‘SIPPs’ and ‘Uncrystallised Fund Pension Lump Sums’ at great length, clients grow even more perplexed at the pension reforms. Let’s not forget that the reforms were meant to offer clients more freedom, not more confusion.

Though the government offered guaranteed free, impartial guidance at the point of retirement, the uptake has been low. Fewer than one in ten people who accessed their pension pots during the early months of the reforms took up a guidance appointment. And now the service itself is under review. 

While many seem to grasp that they can cash in their pension pot, decisions about how to take their retirement income can be more confusing. Poor judgement may be exacerbated, as people tend to underestimate their longevity too. 

Demystifying jargon, listening to client needs

For clients it’s not about drawdown, annuity or cash, but achieving the right outcome for their needs. So as a profession it’s about listening, very carefully, to clients’ motivations, their risk tolerance and their capacity for loss, both real and perceived.

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