by Noel Watson
Two things happened to me this week that made me realise the importance of quality time.
The first was when waiting in a long queue for a rollercoaster at a recently reopened theme park. Standing in a queue is not my idea of quality time, and I wondered how much I would pay for a ticket to jump to the front of the queue if such an option were available.
The second was an ill-fated attempt to replace the water softener resin in our house. Needless to say, after trying to fix it myself, I immediately booked the water softener engineer. The time spent in a failed attempt to change the resin and unnecessary stress it caused was certainly not quality time. Paying for an expert to solve the issue was well worth it.
Following these two events, we had a family meeting with the objective being to put an explicit value on our time. For future tasks, we decided to hire help or pay a premium if the increase in quality time would outweigh the costs.
Of course, by outsourcing tasks I am placing my trust in someone else, which is why it's important for me research by doing things like asking my friends for recommendations.
Retirement planning is not something to undertaken lightly. One of the key decisions for someone planning for retirement is whether they want to adopt a DIY approach or work with an adviser.
Prospects will occasionally come to me, undecided on which approach to take. They have usually spoken to a couple of advisers who have maybe failed to portray the value they can add, or the discussions have been investment focused and the prospect has baulked at the fees quoted.
Given sufficient time, knowledge, confidence and enthusiasm I believe it is possible for an individual to plan and execute a successful retirement themselves. However, someone who has decided to contact an adviser may feel that they are lacking one or more of those attributes and would rather partner with a professional. A key part of the discovery meeting is to explore these perceived shortfalls and indeed any that may have been overlooked to see if I can add value to their situation.
For most people, DIY retirement planning is not something they really consider quality time. There are some that feel they might enjoy it, but it is key for them to understand whether this enthusiasm would continue into their retirement or would instead become a chore. Might they develop new hobbies that mean there is not as much free time in retirement as they had expected?
Continually evolving taxation legislation, developments in the retirement planning space and changes to risk appetites are just some of the many things that the DIY retiree would need consider. With the amount of information available, it's hard to parse out what is valuable. Furthermore, there is always the risk of unknowns. If a retiree has focused on specific funds rather than having a basic financial plan, their retirement may not be sustainable.
It is a sad fact of aging that our mental faculties start to decline, with one source estimating peak financial literacy occurring at age 49 and starting to decline afterwards, by around 1.5% a year after the age of 60. What may seem manageable now may not be a decade or so into the future.
You can also explain to prospects that if they pass away, they risk leaving their partner with very little knowledge of the retirement plan and what they should do next. I recently took on a client with a background in risk management and they emphasised one of their primary objectives when choosing to work with me was making sure their partner wouldn't be left in the lurch if the client were no longer around.
Some other things that I may explore with the client who was on the fence about DIY would include confidence in their planned withdrawal rate should there be a market crash. Would they be tempted to sell their investments and wait until the market recovered? How would they feel during volatile markets if they did not have a professional to guide and reassure them?
My job during the discovery meeting isn't to persuade the client to engage with me but to make them aware of the benefits of engaging with a retirement planning specialist.
How much do they value quality time? We help them preserve it while giving them the best chance of a successful retirement outcome.
Noel has been in the financial services sector since 2000, primarily within investment banks. He left the city in 2017 with the aim of working with people planning for retirement in Surrey and London. Outside work, Noel is passionate about rugby, coaching his son's team and supporting both local teams and the Scottish national team.
