While planning for the future will always carry a degree of uncertainty, regular reviews can help to avoid any nasty surprises.
“It shouldn’t be a surprise at the date of retirement what’s in your pension pot,” says Claire Trott, divisional director of retirement and holistic planning at St James’s Place.
“Those conversations should [be] had every year, looking at what’s going in, looking at the projections as they go.
“There will be an expectation, but that expectation will at worst be 12 months of change. It shouldn’t be a case that you don’t know what’s in there.”
Gavin Jobson-Wood, specialist business development manager at Scottish Widows, says: "A comprehensive and regular review process ought to identify any concerns around investment performance.
"This should incorporate a quantitative assessment of whether the chosen portfolio is on track to deliver the desired retirement planning goals. Investment and cash flow modelling tools may be of particular use in this regard. Naturally the adviser considerations will be different, depending on whether the client is saving towards retirement or actually in retirement and taking income withdrawals from a drawdown plan."
Fiona Tait, technical director at Intelligent Pensions, notes that clients who are in the accumulation phase tend to have more simple objectives to build up as much money as possible within an acceptable level of risk.
“Reviews during this period should be regularly carried out, but need not be frequent, as the overall objective is unlikely to change much until the client is in sight of retirement.”
Trott recommends a conversation at least once a year, while life events such as family additions, marriages and deaths require a touchpoint to review any death benefit nominations, for example.
The sources of retirement income can also influence how often a review is required. Trott gives the example of a client in drawdown while markets are volatile, which may lead to more touchpoints and reassurances compared with a client taking a defined benefit pension or annuity.
Darren Dicks, partnerships and wealth management director at Age Partnership, notes that drawdown reviews during retirement are vital for a number of reasons.
“Your circumstances or objectives may have changed, resulting in a need for more or less income. You might be wanting or needing to make a one-off large payment, such as for a new car or a dream holiday.
“Risk tolerance may have shifted one way or another, or there might be a health-related change that opens up the attractiveness of another product, such as a lifetime annuity.”
Meanwhile Stewart Sanderson, senior private client director at Brooks Macdonald, recommends a conversation about a client’s pension at every opportunity.
