Axa Wealth plans to combine its pensions and investment expertise to offer a new financial planning model called Retirement LifePlanning, in response to the UKs planned pension reforms which come into effect on 6 April this year.
The new strategy is designed to give advisers and their clients more flexibility and freedom in managing income and accessing capital in retirement in order to make the most of the new pension freedoms which will abolish long-standing requirement on retirees to buy an annuity.
Axa Wealth said the new model provides advisers with a ‘bucket’ approach to break down their clients’ financial needs in retirement, and will help mitigate the ‘Big Four’ risks facing retirees: longevity, volatility, inflation and a lack of flexibility.
“We fully support the increased financial freedom and choice people will have in retirement after April, but recognise the burden of risk has firmly moved to the consumer,” said David Thompson, managing director of business development and proposition at AXA Wealth.
“With the opportunity to add more money to their savings largely gone, how people will spend the money they have built up while working will matter greatly,” he said.
AXA Wealth commissioned Milliman, the world’s largest independent actuarial consultancy, to produce the white paper on which the new strategy is based and to provide insight on the key issues of financial planning for individuals and advisers arising as a result of the upcoming pension changes.
The report found that after the changes come into effect, individuals will need a lot more support from their advisers to help navigate their way through retirement, and that existing products needed to evolve to meet the new needs, and innovation can therefore be expected.
It said advisers’ roles will also evolve after April 2015 to reflect the wider choice of solutions available for individuals at retirement. “Advisers’ roles will carry more responsibility as individuals need them to determine the ‘right answer’ for the investment and drawdown of their assets,” the report said.