Worries about long term care and failing to be able to manage finances in old age have sparked a huge increase in calls for help from pensioners.
Financial advisers say later life financial planning inquiries have increased by 86% in the past year – but they are warning not enough people are thinking about the consequences of old age soon enough.
A survey by financial firm Prudential uncovered the concerns of many retirees over how poor health and declining mental powers could impact their finances as they grow older.
More than 40% of advisers confirmed they were dealing with more inquiries about later life planning, while 37% said they were increasingly involved in setting up lasting power of attorney arrangements for clients.
Another third revealed their clients were discussing how physical or mental impairment could affect their finances in the future.
Pension freedom concerns
This surge in inquiries is affecting the business model of many financial advisers. Many are changing their systems to make sure they give clients the right advice – including 73% referring clients to lawyers and 38% flagging later life planning in their regular financial reviews.
But a fifth of advisers feel their older clients are not taking the necessary steps early enough to put their minds at rest.
One specific issue worrying advisers is drawdown under pension freedoms.
Three-quarters are concerned that firms with elderly clients will face difficulties with giving this advice if they run out of money in their later years.
Lasting power of attorney
Vince Smith-Hughes, retirement expert at Prudential, said: “The ageing population is having a major structural impact on financial services and represents a huge opportunity for financial advisers – but they need to be well prepared and ensure that their procedures and work practices can support elderly clients, some of whom could be vulnerable.
“There’s a noticeable change underway with advisers seeing huge growth in business and enquiries which they are adapting to very successfully. This is accompanied by new challenges too. The increasing numbers availing of pension freedoms is set to stoke the demand for advice further still.”
The research disclosed a third of advisers are regularly asked to set up lasting powers of attorney, while more advice firms are seeking partnerships with lawyers to offer estate planning, trusts and equity release.