What is the future of retirement income advice?

Transcript

Louise Doherty: Hello and welcome to Thinking Forward with myself, Louise Doherty, and Mike Ambery.  Here we explore the trends and developments affecting the UK pension industry. And in case you think you've tuned into an old episode, I am asking Mike about his holidays, again. How have your holidays been, Mike? I am very jealous.

Mike Ambery: I love you asking about my holidays, but it wasn't all holidays. I went across to the US and put a little bit of a holiday in there in between. So, obviously just for reference, I paid for my own flights. It wasn't on the company.

Louise Doherty: I know, that's why I said it was your holiday. So you just choose to do some work while you were on holiday.

Mike Ambery: I did! I went to a conference on public policy and how the American landscape is changing, which really focused a little bit of areas of, policy development, changes over there in terms of landscape, auto enrolment, and cyber security as well.

But about the holiday, I went to Las Vegas. And the thing that you usually get intrigued about is me getting up at 4 a.m. wherever I am, globally. So, what happens at four am in Las Vegas?

Louise Doherty: I don't think we can talk about what happens at four am in Las Vegas on the podcast...

Mike Ambery: Shall we move on?

Louise Doherty: Ehm. Today we are going to bring you the fifth episode in our Exploring Retirement Income series. Ehm, last time we had the fantastic Dan Haylett on, talking about all things joyful. Ehm. What were your key takeaways from that session?

Mike Ambery: Yeah, I'll be really brief because we've got some really fantastic guests here. What were my key takeaways? In terms Dan's thinking, it was good to understand that there's emotional decisions, not just financial decisions at the point of retirement. Secondly, Dan can draw a blooming good picture in in terms of what's the saving lifestyle. And then how difficult is it for people to actually work out how to spend, what sort of products are available. And hopefully with, Billy and Pete today we'll head into some of that again.

Louise Doherty: It's actually the art of spending. It's remembering that pension savings are there to provide an income when you retire. And I think people forget about that, at times, and actually allow themselves the freedom to spend the money that they've saved up. So I think a lot of those diagrams that that ehm, Dan does really brings that to life and the happiness that can bring you. I found it fascinating.

Mike Ambery: I've just been to Vegas, so this isn't my problem right now.

Louise Doherty: Yes. So do you need to save a little bit more? Right.

Mike Ambery: Let's carry on!

Louise Doherty: Today, the focus is exploring the changing landscape of the retirement income advice market. So thinking about the past, present, and what does the future look like. And as always we've got some great guests on to join us. So from the in-house team, Pete, welcome. This is the first time you joined us on the pod. So just introduce yourself to the listeners. Tell us a bit about what you do for us at Standard Life.

Pete Cowell: Yeah, thanks for having me, Lou. Yeah. Pete Cowell, I head up Individual Annuities at Standard Life and, really our purpose is, is around providing, guaranteed income, products and solutions that provide guaranteed income to, customers and clients in retirement.

Louise Doherty: Great. Thank you. And then to bring the external perspective in, because that's really important to us. We've got Billy Burrows joining us. Billy! Thank you so much for joining us. Same to you. Just introduce yourself to the listeners and tell us a bit about yourself.

Billy Burrows: It's good to be here. So, I do two things. I run a popular website called The Annuity Project, which is all about trying to make it easy for people to understand annuity options. And I'm a financial advisor, and I've been advising people on annuity and drawdown options for a number of years now.

Louise Doherty: That's great. I didn't actually know about the website. I shouldn't admit that, but we'll put it in the show notes. So, if anyone does want to learn more about annuities and maybe haven't sold them before or hasn't for a long time, have a look at Billy's website. I'll be doing the same.

Ehm. Today we are going to explore, as we said, the past, the present and the future. So we'll start with the past. I mean, the landscape has really changed from an advice perspective. From your point of view, Billy, what are the kind of key things that you would pull out and how have you had to change what you've done over the last ten years?

Billy Burrows: Well, I think it's a case that on the one hand, everything has changed, but on the other hand, nothing has changed. The most fundamental change has been the breaking of the link between pensions and income. In the old days, whenever that was, people got to retirement and use their pension pot to buy an annuity or drawdown. But since, pension freedoms, that's all changed. But the change to the annuity market happened well before pension freedoms. In fact, it was the credit crunch, the credit crunch had the effect of reducing annuity rates and gilt yields. And that led to pension freedoms. And of course, I've been, you know, fond of saying that, you know, with pension freedoms, I remember what my headmaster told me, you know, freedom isn't license. So, pension freedoms didn't give people license to spend their money as they wished. They still needed advice so that they did the right thing.

Louise Doherty: And have you seen a change in your kind of demands coming through from your clients in that time?

Billy Burrows: Well, yes and no. I think at one level the decision whether to convert a pension pot into an annuity or drawdown hasn't changed. And it's still, the, one of the most difficult questions in financial planning. But on the other hand, there are lots of questions, certainly about taking cash lump sums, about tax. And I guess probably, it's true to say that whereas annuity was the default option. Sort of ten, 15 years ago, today people start off, assuming that, a variant of drawdown is the default option.

Louise Doherty: And actually that legislation, easy for me to say(!), has really driven a change in behaviours. From our point of view, Pete, as a provider, are we seeing that change coming through in the way that people are accessing their, their pension savings?

Pete Cowell: Yeah. So I think when I look back over the last ten years, obviously decision making, or pension freedoms introduced choice. And with that choice comes that complexity of decision making. Certainly the research that we, we've done internally, show that when you ask customers and clients, what they, what they want out of their retirement, 90%, more than 90% value that certainty of income. But you see, 80% who, want to access their money flexibly. So these two things slightly kind of contradict, but it's okay because, you know, you can have a mix and match, you know, you can have some guaranteed income and some, some to access on top.

So when I look at the products, the, the sort of core guaranteed income lifetime annuity hasn't, hasn't really changed a great deal over the past ten years. There have been some improvements in terms of how people access the product. But we've also seen growth in, fixed term annuities, which allow customers to keep, keep their options open, providing an element of certainty. But that flexibility as well.

And more recently we've seen, annuities being paid into a pension wrapper, again, adding, adding some sort of, flexibility to, to a customer.

Louise Doherty: Yeah. So actually trying to commit to competing demands, isn't it. So yes, I would like certainty, but I'd also like flexibility. It doesn't make our lives easier, I don't think, from providers' point of view, or an adviser's point of view.

Pete Cowell: Yeah. And I think advisers play a key role in helping clients with those competing demands.

Louise Doherty: And Mike, I always come to you if it's legislation, any policy change. Anything to add over and above the kind of conversations there about pension freedoms and complexity and flexibility that they've introduced?

Mike Ambery: I'll probably say it's been a difficult ten years, since pension freedoms was just introduced. The industry spent a lot of time considering what was the answer to that question of, as you just said, giving you complete flexibility as an individual. But I've not given you all the expertise, certainly around this table, to be able to say, now, make a decision, work out what's needed and what's required. We've evolved and we're going through an evolution now, some people would say it's the most exciting time for change in pension legislation, I’ll allow others to opine on that one

But we've seen a lot of change in terms of helping consumers work out what that journey looks like. Some of it will be, advice, guidance, boundary review, to help support individuals, with guidance. It does question though, guidance can only be supported by data, by having a right understanding of someone's personal needs, finances and their own situation. So while some of the legislative changes will help en masse, will it help individually or not? And that's a position where, speaking of Dan before, it would be good to have Billy's thoughts on it, really of how how will the market evolve where there's still needed to have support, and protection whilst having, as we said before, flexibility and choice, to individual needs and circumstances?

Louise Doherty: Yeah, we're definitely seeing that kind of uncertainty, I think, shifting the needs of clients. So you've got political uncertainty, economic. I'm not even going to mention the T word, but there's so much change at the moment and the fluctuations are impacting the revenue that actually the people are getting out.

So actually, thinking about that, you layer that up with other legislative changes coming through. Dare I say IHT, where does that leave you Billy? As an advisor, there are so many different elements here you're trying to juggle with, to ultimately give the right outcome for your client.

Billy Burrows: My words of wisdom to, to, to any client starting off is to, reduce this to bite size chunks and to look at things step by step. Our world is sort of full of cliches, but the, the one of the buzzwords at the moment is, you know, retirement is a journey, not an event. And I think that's quite important.

And a lot of people don't realize that, you know, the, the first step, the pre-retirement step in many respects is the most important. You have to get your ducks in a row first, with the investment strategy. And the latter part of the journey is also important. It's very hard to plan for, for later life, but, you need to have that on your radar.

But without doubt, the focus is this point of retirement. And there's a lot going on here. And, my, my words of wisdom is that most people understand this journey through retirement. But at any one point during this journey, there are two things going on. There's lots of technical and financial stuff that we're all familiar with, pensions and tax and everything else. But there's also a lot of emotional and behavioural stuff. And no disrespect to advisors, but advisors tend to be better at the technical stuff than the emotional bit. But for clients, the emotional bit is the most important.

So the best bits of advice is where you have the technical and the behavioural emotional things, working in tandem and, and that takes a lot of, time and energy. But it's important because that's the only way that you can get, you know, people to make the right decisions.

Louise Doherty: Yeah. And actually, we've talked a lot on the pod about AI and how things can really help, but actually you can use tools to help with the maths bit of it, but the emotional bit of it, that's when sitting down with someone and actually talking about it and asking the difficult questions about how do you feel about retirement, what is your ultimately your goal? It probably, they're not going to say is X amount of money a month. It's actually how do you, how do you want to feel?

Billy Burrows: Well, I'm glad you've asked the question. The most difficult part of what I do, giving advice, is getting people to articulate what their objectives are. And if you can get people to, separate what I call the strategy from the tactics and the strategy is having a plan. If you can get people to focus on a plan, you have a good chance of finding the right solutions.

And AI is an interesting one. I've been involved in some of these, sort of decision making trees and automated advice, and it works where it's a linear process. So, for example, you know, I think you can use AI, to come up with, investment solution, but with retirement, it's an iterative process, or as I call it, you know, clients are like windscreen wipers. You know, one day they want, guaranteed annuities, peace of mind and security. The next minute they want flexibility and to take risk. And where does the windscreen wiper work? And that's very difficult to automate. And it's all about framing. And, you know, there's been a lot of research here. The answers people give to questions and their solutions depends on, you know, how the questions are framed. And it's more of an art than a science.

Louise Doherty: Yeah, I can imagine. And then thinking about these kind of, changing needs, I like the windscreen wiper. Pete, from your point of view, you're involved in looking at the solutions as a provider that you were coming up with. How do we make sure that they're, they keep changing based on these changing demands of our client base?

Pete Cowell: Yeah, we definitely see, people are, people are working longer. As Billy said, retirement's a transition. It's not a sort of single point in time event. So we might see people who, reduce their hours, maybe, you know, go, go part time, or perhaps take a career change. And they may look to sort of supplement an income with, with their pension rather than actually just replace an income, with, with a pension.

And so certainly the fixed term annuity has a, has a role to play there, where people can, use a fixed term annuity to supplement an income while they're still working. And the role of advice and guidance, as we're saying, is, is crucial to people to support them through, through that transition.

Louise Doherty: Mike and I were talking about this on the last post about what we want to do in our retirement, and I want to go part time so I can spend more time riding my horses, Mike wants to go on holiday more. But actually, I think your needs are even more complex because you're going to Vegas, so you still need some extra content in whatever you're doing to fund that!

Mike Ambery: That's possibly true. Yes.

Louise Doherty: But I guess on a serious note, money worries and all of these, kind of changing elements, are impacting people and probably making them feel a little bit more worried about drawing down from their pot. When Mike and I were in the States, we'd heard research that was noted saying people are more worried about running out of money than dying

And that's actually something that we've spoken about quite a lot. And everyone that's been on, it's really resonated with them. So do we see that kind of, I guess that the worry needs changing how people want to take their income. So that's something we've seen. Pete?

Pete Cowell: Yeah, we've seen, research from Standard Life. The proportion of people who say that they're comfortable this is research for people aged 60 to 80. The proportion of people who say they're financially comfortable in retirement has, has fallen. Sadly, it's fallen from 43% down to 35% in 2024. So, you know, it's just over a third of people who, who say that they're financially comfortable in retirement. So those money worries are, real and, you know, the, the, the products and solutions that we offer to provide a guaranteed income, you know, to cover essential spending, essential bills, hopefully help, help our customers and clients through, through that, through those money worries.

Louise Doherty: So, and actually just having that peace of mind that I think I hear the phrase a lot, the kind of heating and eating is covered, but actually that does give a bit of peace of mind and knowing if you've got regular money coming in.

We've been speaking to a behavioural scientist who'd given us an example of you go through your working life paying your bills and providing with that monthly salary. And actually, if you don't do that into retirement, you actually start to feel that you're not the provider anymore within the family. So actually, there's an emotional benefit of still having guarantees and still feeling like you're providing. And that's kind of stuck in my mind for the last few months. It's actually probably something that's quite, quite important. I can't buy peace of mind is that.

Pete Cowell: Yeah. Yeah. I mean, I was, actually discussing this with Billy earlier the, the, you know, the way people budget, the way people manage their money on a monthly basis, is built from habit. You know, if you spend 40 years of your working life, you know, managing your money, getting a a payment, maybe on the first of the month, you know, paying your bills, having a little bit left over, you know, it's very hard to go into retirement and to do something completely, completely different.

So actually being able to provide that kind of stable, stable income and guarantee a stable income, it doesn't, you know, from, from whatever source. I think it's really kind of valuable to people.

Billy Burrows: Can I chip in on that? I'm sort of seeing something similar, but slightly different. What I'm seeing is more of a transition into retirement. So, I have a lot of clients who come to me, and they're a point in their life where they're used to being in control. They're either running their own business or they're senior management. And the priority is flexibility and control. But as they go into retirement, they're moving to a space where they want to spend less time looking at their investments and making decisions. And eventually, to a point, where actually they want to sort of hang up their boots and have a regular income.

But it's not one point in time and it's managing this transition that is quite difficult. And it sort of feeds into this idea of flex first and fix later. And we're certainly seeing a lot of people starting off wanting to, in product terms, you know, using drawdown and perhaps some ad hoc payments, to a point, sometime in the future, when they want to, you know, buy annuities. But you can see that that's a very intensive, advice process and one that does need, a lot of skill and perception and intuition as well.

Louise Doherty: And then, I'll come to Mike, thinking more globally, what are we seeing in other retirement income markets that that you’ve visited and had experiences with.

Mike Ambery: So, I think it's, globally it's quite similar to the UK. And I'll come back to the UK and answer it because the UK answer looks to overseas.

So, we have PLSA Retirement Living Standards, recently updated. And it's really very useful to, and is based upon, that sort of bucket of outcomes at retirement. Where do you want to be? Do you want to be comfortable, or do you want to have a, a different standard of living? And I think it goes into, Billy's thought process there of the windscreen wiper and how to make the right decision at the right point in time, whether it's a financial decision, a behavioural decision, and sort of where to go to. So in a sense, some of the updates that we're seeing on regulation and with living standards and ask the question of what does an individual want to do whilst we're trying to solve a solution at a mass level to say you might be in one of these buckets. It does really go to other areas as well.

So it's important to understand the sort of tier one system, what does this type pension actually offer, wherever you are globally. What's the state? What have you built up?

Then secondly, we go into the sort of tier two. What's your, what's your private savings. Add those both together. Does it achieve the objective that you want to in retirement or do you need to change some of that journey process?

So I think it's really important that as we evolve, what does retirement look like, and the products globally and sort of evolving in the same direction and heading towards maybe giving default like, solutions or some sort of guided retirement solution. Underpinning all of that, globally, it’s on the same basis of we need to give you some, some form of protection at the point of retirement, so that the underlying point there that whatever you build up privately, there needs to be a level of protection to give you that peace of mind, going forward.

So I'd say the UK, for once isn't behind, globally. We are innovating, we’re designing products and propositions, to fit what, to sort of furnish what people at the point of retirement want to take. The difference there is, is how are they consuming that, whether that's advised, whether it's guided, and what that looks like in future years.

Louise Doherty: And that does leave us to move on to feature. I'll probably stick with you, Mike, while you're in the hot seat.

Legislation is changing all the time. We've had a lot of updates over the last few weeks. Where do you think the future is taking us? Yeah, it's. I want a UK perspective.

Mike Ambery: Yeah, I don't worry about that. I don't think I don't think we're stopping it. We've had a series of measures. We've had the sort of pension investment review, pension schemes bill, spending review, and we'll see further adequacy reviews later on, through the year.

It's really designed around roadmaps over the next 4 or 5 years, which is the political term of the government. For how does it drive economic change and how does it give consumers better value and better outcomes? In terms of pinpoint to, in a savings cycle, how can we deliver better investment performance, better engagement, and better services for consumers and customers in the UK, to at the point of retirement, do we need to start looking at defaulting retirement journeys and support? And whether that's based upon data being available from dashboards. Whether it's cumulative data, which is individuals with support, advisers, helping consume that data and then work out what the solutions are. Whether they're defaulted solutions or whether they work through to, something that both Billy and Pete were talking about before, more personalized solutions, and making sure that they fit a need for an individual client needs, on the run up to retirement, at retirement and then in retirement.

So I think there's at least three different segments to, get into, which the regulation can help with. But it certainly needs an advised community in the products to be able to support that.

Louise Doherty: Yeah, absolutely. And thinking of the future, Billy, we mentioned earlier the, the growing popularity of annuities at the moment. Do you think that's something that we'll see continue in the future? What are your thoughts?

Billy Burrows: Oh, I think so. One of the problems with annuities is that people don't understand them. And I describe an annuity as being like a mortgage in reverse. You, give your money to an insurance company and that a clever actuary will work out how long you're going to live, and then I'll repay you back your capital plus interest.

The problem, after the credit crunch, was that interest rates and yields fell to the lowest level in living memory. People, basically, were lucky to get their money back. Now, the underlying rate of return is about 5%. So, people are getting back their capital plus 5%, and they probably don't realize, you know, what a good investment it is.

You probably won't know this, but, you were talking about Vegas and, my family come from the fairgrounds and I joined, a very large insurance company to help them promote annuities. I went for an interview with Money Marketing, and, they took me up and down Soho trying to find, a pub with a fruit machine. And there's a picture of me pulling the arm of the fruit machine with the title “An annuity is a gamble”. And of course, it's a gamble, with the insurance company.

The problem is that most people underestimate their life expectancy. So, they think the odds are against them. But the older people get, the more likely that they're more realistic about their life expectancy. So you can argue that, you know, annuities become a better investment for people as they get older, and there's no such thing as an optimum age to buy an annuity. But you can argue that anywhere between, you know, sort of 65 and 75 is a good age.

But the most important part about it, is and on a very serious note, in a world of so much political and financial uncertainty, annuities are the only financial product that will provide guaranteed for income and income for life with complete peace of mind and total security.

Louise Doherty: Complete peace of mind and total security.

Billy Burrows: And people need lots of that at the moment.

Louise Doherty: Okay. And let's hope there's no more legislative change coming down the line that we have to rerecord that section!

We've also talked about future proofing, businesses. So thinking about, I was reading a piece about advisers becoming more efficient in focusing on, productivity. How many clients can you see, using AI to do other tasks that are not involved in the 1 to 1 time that you spend with your clients. What are your views on that?

Billy Burrows: I'm only laughing here because I was coming on the train this morning looking at a, an article in on City Wire. One advisor says he can deal with 100 clients a year, but with AI can take on another 50. I've already given my views on AI, and there's no doubt that AI and technology can help with the back office.

But people need advice. And one of the things that I do worry about, you know, just because people have got, a small amount of money in pensions, they shouldn't be treated as a second-class citizen, in terms of financial advice. And I've heard, you know, people, putting up ideas of how to solve the so-called advice gap, and time and time again, you know, people talk about technology. But I'm not so sure that technology is going to solve the advice gap. Certainly, in the short term.

I think, people need more help, support, and advice. And advice doesn't have to be overly complicated and expensive.

Louise Doherty: Okay. And then Pete, from a provider perspective, thinking of the future, we were obviously, looking at lots of innovative solutions at Standard Life. But lots of providers are coming out in the space with new products to market, which is great because I think as an industry, we have to be thinking about the changing client needs and making sure that we're outcome based in all of the products that we create. Do you think there's any gaps there? The things as an industry, we should be thinking about, over the next ten years?

Pete Cowell: So I think there will always be an, an element of, customer need and client need for guaranteed income in retirement. We don't see that need going away. I think if you look over the next ten years, we do, we do expect annuities to continue to grow. We think they'll be a core part of people's retirement solutions.

You know, advisers play a key role in, in helping, customers to, to, to manage their transition into, into retirement and guidance as well. To help people through, through that. So I don't I think there's a, there's lots of sort of product solutions that are out there. I think actually the advice and guidance journeys are as important as, as the products and solutions.

But yeah, we are seeing, we are seeing innovation in terms of how can products provide, meet that, those competing demands for, certainty of income and, and flexibility.

Louise Doherty: And what about views on AI? Anything to add to the conversation Billy and I had on that?

Pete Cowell: Yeah, I think I think we touched on it earlier, earlier in the podcast as well. You know, the role of the adviser is to help, elicit the, the goals of the individual. And, you know, certainly AI can help, with the process, but I actually the, like I say, the emotional connection actually really trying to understand, an individual client's goals and where they're coming from. I think that won't go away. So, my hope really is that it'll be human-led and technology enabled rather than the other way around.

Louise Doherty: I like that phrase, actually, human-led and technology enabled. Anything to add to that, Mike?

Mike Ambery: In terms of AI itself? I guess my considerations of AI is one of the worries around AI. Coming back from a conference where cyber security was, and more freedom of data, was that data actually prescribed to individuals that have probably never engaged with it previously. How do we help, customers and clients actually engage with that data to make meaningful decisions?

It's sort of okay in regulation to be guided, and to be supported around that. But I'll paraphrase what Billy was saying before, you can't replace Billy with AI, and a bot, to give the right answers to the right individuals, because as educated it can be, it can't perceive, it can't really look into that level of detail. It might do in future. But I think, we need to be aware of not just running to a technology solution that isn't right for everyone. It will help certainly support other aspects, but equally, we've got to be wary of the security concerns around it. And that's not to stop innovation, is not to say it's not right at all.

But at some of the real key points in life, and we've seen this globally, people make decisions about moving their entire lifetime pots to different solutions. That's a key critical point in time where you need advice and support. Technology can help. People can help.

Billy Burrows: Don't forget that advisors have an important role to play, and perhaps one of the most important bits is reassurance. As you've just mentioned, decisions about moving a large amount of money and, in the context of sort of annuities and drawdown, quite often I have clients come to me and they think they know what they want to do and they're looking for, you know, reassurance. Am I doing the right thing? The problem is that guidance is great, but it doesn't give people the very thing they want, which is the reassurance, or to know what they should do and, and that's a very difficult, gap to bridge.

Louise Doherty: I had the same conversation with someone earlier. You can say people like you will do this. And then the person say, well should I do that? And if you can't say yes, you can't offer that reassurance. Then it leaves them with more questions and more worry.

Billy Burrows: Well, I use my John Lewis, example. So, you know, imagine you go to John Lewis to, you know, buy a new dress, or to buy a new suit.

Mike Ambery: I might go to buy a new dress!

Billy Burrows: You know, you, you, you go to the changing room, you try it on and you say, you know, does it fit the on the shoulders and, you know, it's a yes or no. And then you say, well do I look okay in this? And so sorry we can't tell you that. And if that happened in John Lewis, you'd find it bizarre. But this is what happens, you know, in financial services.

Louise Doherty: I never thought about it like that. Because if you ask, they always say, yes, you look lovely.

Mike Ambery: Yeah. I guess it goes into my sort of question back. Are we seeing, clients change? And their questions, their understanding? Do you feel that's changing or changed?

Billy Burrows: That's a really good question, because what I'm finding is that people are doing their, their research, and of course, they can come to you, with the wrong impression.

Mike Ambery: Yeah.

Billy Burrows: So, for example, you know, I get people who, you know, implicitly are saying, well, you know, annuities’ a legalized theft or, and you have to correct them.

Equally, people, you know, come to you and say, well, you know, I've got my own idea of investments, you know, I know and and I suppose I can I can sum it up, like this. And this is not an exaggeration, but I have clients who come to me. They say, Mr. Burrows, I know exactly what I want to do. You know, can you do this for me?

And after 2 or 3 conversations, I'll say, well, now I'm more informed. Now I understand the key issues and the risks and the choices. I'll do something differently. And would you believe I had an email from a client and, I'd helped him, and he said the mistake I made was at the beginning thinking I knew what the answer was. It wasn't until I spoke to you that you explained to me, I've got different options, that I know what the right thing was.

Mike Ambery: That's brilliant. I'm going to ask you Pete, if it's okay. What do you think's missing, then, in terms of where we are now, where we're going to be in the future, either in product or requirements for advised markets?

Pete Cowell: Yeah. I mean, I think the product solutions are out there. We've got solutions that provide lifetime income, short term income, you know, paint a pension. There's lots of different, different sort of product solutions out there. Actually, like we've discussed today that the the role of advice and guidance to actually help people support, you know, if you've got a long, a longer transition into retirement that may include, you know, a period of part time working, you know, it might may be over a ten, 15 year period. And your needs are going to change over that period. So it's actually, I think, it's how can we support customers and clients over that sort of 10 or 15 year transition, if you like. You know, using the, using the products that we have have today. But is actually kind of support over, you know, rather than transactional support, support over a longer, a longer period.

Mike Ambery: So that's why I say, and we had a conversation globally on this. We've evolved products and solutions in the UK quite rapidly over other geographies. I'll also say that I think, customers are retiring differently. They're choosing to phase retirement, flexible working, flex that when they're retiring as well.

I guess for you, Billy, are you seeing any change or are you seeing anything missing that we need a little bit of a jigsaw piece to go in?

Billy Burrows: I think there are two parts to that question. The first, bit is that if you think about it, when you convert a pension pot into income, there's only two choices - some sort of annuity or some sort of drawdown. So, I don't think there's a magical silver bullet. People have tried to, have innovation with annuities that both have annuity and drawdown products' features in them, but they don't really work.

And the second part to this is that people are retiring in different ways. And as I mentioned, we're seeing more of a flex first and fix later, which means that I think this is about a combination of options and it's a dynamic combination. So, things are changing.

The way I see, retirement is that it's quite logical, so people will start off wanting flexibility then as they get older, moving into, more secure, products. And I think the de-risking is important, de-risking in terms of investment and de-risking in terms of annuities.

Louise Doherty: So one size doesn't fit all. There's fix. There's flex, and everyone is retiring in different ways. Is what I'm taking from this conversation. I'll call us to a halt there. Any final remarks from anybody before..?

Mike Ambery: We need a crystal ball question, don't we?

Louise Doherty: I love a crystal ball question. No, I don't. Everyone knows I hate a crystal ball question. A crystal ball question. For those who haven't watched before, we always have a crystal ball question. We've covered a lot about the future actually already. So this leaves me a little bit stumped.

We're seeing some retirees, in a bit of a trend, of people going back to work. Is this something that anyone else has seen, and do we think it is something that we will continue to see?

Billy Burrows: I don't see people going back to work, but I do see people retiring gradually and making conscious decisions to trade full time work for, part time work. But one of the things that I am seeing is this intergenerational thing, I think that's good and bad. I think the bad part about it is, I foresee a lot of inequality. I can see one group of people were very fortunate to have baby boomer parents who pass on, wealth, especially pension wealth, and another group who are not so fortunate. And if the younger generation are under provided for with pensions, it means that inheritance or any other sources of capital, can make the difference between, a good retirement for them and a struggling retirement. And I do feel for, you know, the future generations.

Louise Doherty: Pete, crystal ball question. Yes.

Pete Cowell: Yeah. I've seen some research from, Phoenix Insights that says that only 15% expect a hard stop retirement in ten, 10 to 20 years. So similar to what we've been saying around, you know, it's a longer-term transition, maybe, maybe doing some part time working. But yeah, people will naturally go back into the workplace as well.

The underlying need is still there through retirement. And, you know, there are some products that can help if people do want to go back to, back to work. You know, I mentioned the annuity that good gets paid into it, into the pension wrapper. You know, that can be an example of where you, you know, you can flex how much income you're taking out of that product out over time so that, that does support if someone does want to go, go back, back to work.

But I do, I do think, you know, the industry is well-placed to, to deal with this, to, to deal with these more nuanced retirement journeys. You know, the advice and guidance can, can support with that. And, and we have product solutions that, that offer, a degree of flexibility as well.

Louise Doherty: Thank you. Mike.

Mike Ambery: Yes, I'll shuffle forward to the edge of my seat really because we're waiting for adequacy. Are people actually saving enough? And that adequacy review that's been promised for some time is due to come out.

That will be a real key of, can, do, can and do people have enough saving at the point of retirement? And then second to that fact, are they educated about what they need and, how and when and how do they wish to retire. So for yourself personally, you know, will you have enough money to be able to afford a lifestyle that you enjoy, with the horses? At what age? You know, what time and how much money do you need? Part of that is linked to how much have you built up, and is that in line with your direction? But second to that is, do you understand that need of how much things cost and, dare I say it, how that changes in retirement as well? We're at a position in time where there's always a lot of change, things are less stable currently, and I know that makes us a little bit sweaty, but, just an understanding of how that change looks, enables us to look at the crystal ball in different ways.

Louise Doherty: I need the PLSA living standards to add in horses. Don't take that into consideration.

Mike Ambery: I'm sure they're listening!

Louise Doherty: Thank you so much for joining us today. Ehm, it's been a really great conversation. And listening to the the quality of advice that is on offer for clients and the quality products as well. Sounds like we're kind of well set it there. Ehm, and perhaps we don't need our crystal balls as much as we thought we did.

As always, you can catch up on previous interviews and podcasts on our website. Just search Standard Life Thinking Forward. And let us know if there's any topics you want to hear of, or if you want to come and join Mike and I on a future episode.