Video | What is the future of modern retirement?

Louise Doherty: Hello and welcome to the Thinking Forward podcast with myself, Louise Doherty, and Mike Ambery. Here we explore the trends and developments affecting the UK pension industry.

So welcome back to Mike! You have just been on a 2 to 3 week holiday which felt like a lot longer to me, stuck here. How was it? How are you feeling?

Mike Ambery: I'll just dispute that slightly as you were on holiday for a week of that time as well. So, you know, it's not that that far. Holiday was great! I always was finding good to go on holiday and to a bit of pension research and see what people are up to, particularly in Las Vegas, which I wasn't. But you can usually find someone in Las Vegas that has lost all their pension fund or has built up all their pension fund. So that's maybe the next destination to go to?

Louise Doherty: Okay. I was actually quite impressed that you still did your Sunday update, so I still knew what was going on in the pension media, even where you were not even in the country. So if anyone's not seen Mike's updates, get on LinkedIn on a Sunday morning. You might be in a Hawaiian shirt. You might not!

Mike Ambery: It depends how I'm feeling to what I'm wearing, obviously. It's usually three topics. And thank you for being my only…

Louise Doherty: subscriber?

Mike Ambery: Yes, I over the course of time, we now will get at least 2 or 3 other people watch it for about 14 seconds, on average.

Louise Doherty: It's only a minute long as well. So it's not, it's not too much of an ask.

Mike Ambery: Yes, true.

Louise Doherty: On today's pod, we're going to bring you another episode in the series that we started last year, exploring the future of retirement income. If you remember, we kicked things off with our very own Claire Altman, launching her white paper exploring the changing nature of retirement and the increased importance that people receive support and guidance before they retire, as well as to and through their retirement. It was titled 'Avoid sleepwalking into retirement'. So if you haven't read it, you can get on our website, and we can add a link into the socials and our show notes as well.

The second episode, we were joined by Matt Burrell, talking all things regulation and policy. So if you remember, that was default decum, targeted support, and Matt is actually off on his pat leave at the moment with the lovely baby Oliver. So I'm sure you'll still be listening though, So a big hi to Matt! You'll be glad to see that we're progressing, and on to episode three.

Okay, so back to today. The next episode in the series, we're actually going to talk more about the human side of retirement. What does retirement mean? I was thinking about it, and actually, ehm, for me, I don't, I'm not going to hang up my high heels on a Friday, And then, on Monday, get on my gardening gloves. And if my friends know my gardening game, they'll know that's not happening. Ehm. But I don't imagine that kind of complete shutdown. I imagine I'm going to go down to three days a week, or maybe I'm going to do short term contracts. Definitely want more time with family, but I don't see myself stopping working in this industry. Ehm, but what products are there to support me doing that? Where's that flexibility? But where's the certainty that I'll need? Because, you know, I've got expensive horses. How am I going to consider paying for them? So I'm not sure of what it looks like for me. But what about you?

Mike Ambery: Well, for me, it's more about what does modern retirement actually look like? And that's a world that is very different, say a decade ago, 20 years ago or something like that. The way people now save for retirement and spend in retirement is dramatically different from their, future. Future generations will be very different from what their parents, naturally had. For me is like, you know, you reference holidays, I talk to various different people around the globe. And what am I jealous of? I'm jealous of timezone change. I had a timezone change when I went around the globe and had an extra ten hours of Sunday. That's it! So for my retirement, I'd like every day to be a Sunday. And when we get to it, not with a Spurs game!

Louise Doherty: Indeed, indeed. Ehm. Don't worry, it's not just us talking about this today. As usual, we've got some top-drawer guests. I'm super excited to invite back Claire Altman! Claire, thank you so much for coming back. I know that the series, the future of retirement income, is close to your heart. Ehm. But can you just introduce yourself and remind the listeners what you do?

Claire Altman: Well, thanks, Lou, and great to be here. So, I run the Individual Retirement Solutions business, which effectively is about building products that give customers certainty and security in retirement.

Louise Doherty: Okay. And we've got a brand-new guest, Dan. I'm terrified that I've invited someone from a podcast onto a podcast. But you're not just a podcaster! Why don't you introduce yourself, and tell us a bit about what you do, and your business?

Dan Haylett: Yeah, I'm delighted to be in a proper studio, not just my office with a clip on mic and recording this. So, this is this is wonderful. Thanks for inviting me! Yeah. So I, I'm a director of a regulated financial planning business called TFP Financial Planning. We do solely, exclusively, work with people in retirement or approaching retirement, 55 plus. And thinking about everything to do with retirement. So our focus is not just on the money, on the human, and what they're looking to do and achieve fears, aspirations, etc. And that really led me to launch the podcast and to do so much more work off the back of that understanding through real experiences, working with clients, you know, what, where their retirements have not gone quite right, where they're, you know, where they're really thinking about what to do next and how to do it. And it led me down the road of, I think what we're going to talk about today, a lot of the non-financial stuff about retirement and working with them. So that's where a lot of my focus lies, both on the spreadsheet and on the human as well. So, I can't wait to dig in!

Louise Doherty: Yeah, and I think we're going to have kind of three topic areas today. So we're going to first chat about this modern retirement. It's a term I've heard more and more people using. So we can talk about that.

We're going to talk about services, products, what might we need for these future retirees.

And then lastly the question everyone seems to ask just now, we're going to talk about AI. We're going to be talking about tech. We're going to talk about the future of our industry.

So yeah, we'll kick things off. If I said to you, Dan, you know, modern retirement. What does that mean to you?

Dan Haylett: Mike summed it up pretty well, actually. I think to me this retirement is so different. It's not just a modern retirement, it's a completely new retirement. A retirement, as you've probably talked about, it's a manmade concept. We've given it a name. It's 100 odd years old.  But people retiring today are retiring in a way that no other generation has retired. So they've got no blueprint, they've got no framework. They can't even look at their parents, really. And, and, that's both from a financial point of view, obviously the financial set up is completely different. The weight of money is on the shoulders of the individual now, not a life insurance company providing them an income as much anymore. And, and also, you know, their, the lifestyle that they want to lead is so much different from their parents and their grandparents. So, I call these, you know, these are first generation retirees. I think they are first generation modern retirees. I've kind of dubbed them first generation retirement rebels, I think is what I say. Because they're not, retirement is not a thing that they're going to do in the sense of the dictionary definition.

So, a modern retirement is unknown. It's messy. It's completely human. And it actually involves so much more than any other generation has had to kind of endure. So, yeah, I think it, it really is going to evolve at a pace as more and more people think about what they're going to do in their second half of life. And as you said, Louise, I think it will be working and, you know, and meaning, and understanding, and giving back and all of this stuff that a lot of people have more aspiration to do than ever before.

Louise Doherty: Yeah, I love when you talk about the second half of life. We were talking earlier actually, about a campaign our Irish business ran, and it was, you know, retirement wasn't used as a term. It was Second Life. And it's actually, it's a completely different format, I think, to what people have been used to. And we've got to reframe the way we do things, I think as providers, advisers, as product builders, Claire, what would your kind of views be on it?

Claire Altman: So, I think one of the most interesting things about, about this puzzle, and one of the reasons I'm just so happy to have Dan here today, is that I think until now, really the, the, human side of it all has been a bit forgotten, and we've been thinking of this as a maths problem rather than a human problem. And I think for us, the key thing is that we do have to think about how people feel in retirement. And if we don't, if we don't think about that, we're just not going to, we're just not going to deliver in the right way.

Louise Doherty: I think it's reframing. We've been talking, I was talking to someone, a colleague, about accumulation and de cumulation. And I was like, that's not it. It's, people are saving money and then they're spending money, like, let's try and humanise even the language we use. But then, how are we spending money? Are people comfortable spending money? Is that part of the problem? Do you have products that allow them to spend? I'm not, I'm not sure that even I like spending a pot of savings.

I think Dan and I were talking about it. You can spend your monthly wage because you're going to get it again next month. But, so your graph will look like this, and hopefully it'll look like this. But if you're just taking the money out, I think that, emotionally, is a huge thing for people to consider.

Claire Altman: I think, yeah, I completely agree. And so knowing, like you say, that there will be money next month and there will be money the month after, and as long as you live, then becomes a big part of what you probably need from your retirement income. Yeah.

Louise Doherty: And when you're sitting down, Dan, having these conversations with clients, how do you, how do you approach this kind of different mindset to it?

Dan Haylett: Yeah, I think one of a modern day planner and adviser's greatest missions and jobs is to unlock the spending shackles that sit within our clients. And if we, again, think about human beings and how our brains work, our brains haven't evolved in a way that allows us to spend our money. We're still a survive first, thrive second creature. And I talk about this a lot, right? Our ancient brains will lock stuff down if we feel threatened. And spending money is a threat to us.

We, if you think about all of the things that saving money gives us - a sense of security, a sense of identity, you know, status within our social circles and the peace of mind, you know? I mean, you think of how that's been quite rightly rammed down people's throats. You know, you need to save. Need to save. You need to save. Auto enrolment in the pensions industry, it's been wonderful, but it's again, another habit that people have been ingrained in for a period of time.

My grandparents like, you know, save, save, save, rainy day, rainy day. And you then ask people to do this kind of, you know, up the handbrake, 360 turn to flip the switch. And it's a bit like for me, I'd say to people is a bit like spending 40 years building a sand castle and then going, by the way, you've now got to trample all over it in a day, like it doesn't, it doesn't make sense to people to do it.

So our ancient human brains, will just lock this down. So we need to understand, I think is the first thing. Like with anything, when you're dealing with human beings understanding that it's perfectly natural and rational to think like this. If I could ban the, ban the word irrational, I would. People aren't irrational, they’re just being human beings. They're just, you know, they learn behaviours.  What they've observed is making them think like this and do like this.  So yeah, I talk a lot about unlocking the spending shackles and making sure people, and reframing it is absolutely vital. No one knows. What does decumulation mean?

I talk to people about turning their money into memories, not their investments into income. You know? We should be helping our clients create memories, have experiences giving your money meaning. And there are definitely really cool, cute, little ways that we can help our clients reframe this in their head.

One of my most downloaded sketches is one where I've got this big block of red at the end of a net worth going up, and it kind of says, you know, your net worth is going up. You haven't left money on the table here. You've left memories and experiences. How do you feel? How, how will you feel if you get there? And so sometimes people need a, an empathetic hug or a punch in the face, metaphorically.

And so and it's okay to be truthful with people. We understand, you know, there's enough stats out there to allow us to do that. So yeah, it's having truthful, honest conversations with them, and understanding the role that income does play in this to, to give people that sense of peace of mind that they can go and spend their money on what they want to spend it on.

Mike Ambery: If we look at spending Dan, I think it's what you do with clients and helping clients, 55 plus, do you think we've got it right in terms of saving? You're absolutely bang on. Auto enrolment has help defaulting people for, getting money in a pot which will help them get to a point of retirement. Would you, would you say, A) we've got that right? And B) with your experience, dealing with those 55 plus, what would you give back to someone who's maybe 10, 20, 30 years younger to be able to say, just make these decisions at this point to realise how you want to live and experience?

Dan Haylett: Yeah, I love that. I, I talk about the skill of spending. Right. So I think we can teach ourselves the skill of spending wisely at any point in our lives. If we can. And I think younger people, I sound like I'm really old. I am old, I think younger people are better with values. Than, than, than I am, than we are, than my parents, you know, they're very value driven people, mission driven people. And I think that's actually quite a good thing to align spending with that.

If you figure out what, what you love, you figure out what brings you joy, you figure out what brings you happiness. And you can, if you can build the skill of spending money on those things. Because, again, all the research about how we, act as human beings and what gives us joy and happiness and what we spend our money on is, you know, you can't argue stuff doesn't give us, stuff is this big dopamine hit, one off stuff happens. Nice car, nice watch, goes down the pan. Experiences, on the other hand. What they call memory dividends. You know, you spend your money on stuff that brings you. That, that creates this exponential curve upwards in the joy that your money gives.

And I'm talking to my kids about this now, right? This is stuff that we can learn the skill of spending alongside the skill of saving. And I think the sooner we can kind of, be a values driven spender, the better it will be. And I suppose my number one takeaway is that when this is done right, even with people I work with, that have got considerable amount of wealth, high achieving people, when they truly get down to what they value and what brings them joy and happiness, don't cost a lot.

And that's the key thing. I think that a lot of people think it's kind of actually this thing's going to cost a lot of money for me to live. And actually, if you kind of do it well and you think about what really brings you joy and happiness and who you want to spend your time and money with, then that's a really good skill to learn really quickly.

Mike Ambery: Now that that's the human sort of emotional behaviours, which I think is really important. Claire, I'm going to ask you something as well in terms of the sort of at and then into retirement or the journey process. We do a lot of research. You do a lot of research, you've written whitepapers and, engage with policymakers on this. Do you think we have the right balance of products to help with build what the experience, what consumers actually say they need?

Claire Altman: I think we're getting there. I think there are lots of really good ideas as well out there at the moment. I think in time, 2 or 3 years down the line, we're going to see a lot more innovation in products. But even now, so to give you an example, a smooth fund, where you're smoothing out temporary volatility, for somebody who gets very nervous by ups and downs of the market, this is a fabulous product for them because it means that rather than when markets drop, you panic and you pull your money out, you just leave it in there and then you ride the you ride the upwards trajectory as well. So so there's lots of good products out there I think. But I think we will definitely see lots of innovation, coming down the pipe actually. And we will have this conversation, I hope, again in a year or two. And let's see where we see where we're up to.

Mike Ambery: I think you're totally right. And we should do that because this legislation's going to change over the next six months. I'm pretty excited about that. And I think we could have this same conversation with saying, what are the products? What are the support, what's the guidance?

Claire Altman: That's it.

Mike Ambery: What's out there, from advisers now to change that world. And does modern retirement actually blend in with that going forward?

Claire Altman: I think the very cool thing at the moment is you've got, you've got Department for Work and Pensions very focussed on outcomes and you've got an FClaire Altman really wanting to break the mould and do things differently and support, and support customers. And those two things together, I think are a recipe for getting this really right, actually.

Louise Doherty: And I think you roll that into the kind of role of advice, of guidance where that line is what we can do for those who aren't seeing advisers. It is a really exciting time and so much change coming through that.

Claire Altman: Definitely.

Louise Doherty: Yeah, yeah. Dan, do you feel that in your business and thinking about as an adviser, do you feel your role changed from when you started doing it to to what it looks like now?

Dan Haylett: Yeah, I mean, I mean, I've only really been, doing it for seven years. And, I mean I was fortunate when I come in to, I mean, I've been part of the financial services industry ever since I realised I wasn't very good at cricket or golf, and I needed to get a proper job. And, and so I joined and become a financial planner seven years ago.

And I was fortunate in that I didn't have the baggage. I mean, I knew what I wanted to do. I travelled the length and breadth of the country speaking to financial advisers. And I kind of really knew what I wanted to do. So I was fortunate from that, actually. But even then, even going into that open eyed and being, wanting to deal with the human side of things and make sure I was kind of a, you know, was quite a lifestyle financial planner rather than just focus on numbers. It's shifted dramatically over the last seven years.

And I would say if, I think if, if we can define our roles as in two, right. Mechanic and guide, I think that's the best description that I would say. It's, I would say it's 70 to 80% guide, 30 to 20% mechanic. Because I just think that, you know, the technical element is important, the money is important, but the human is more important. The emotional reaction that you have to these things, the ongoing. You know, a financial plan is, is useless. The moment it's created, it's wrong. It's just, it doesn't, it doesn't, because the real world just then happens.

Ongoing guidance, ongoing planning, reacting to emotions, reacting to tariffs and market volatility, and all of that stuff that comes about, reacting to life circumstances. You know, so that that human guidance is so important and to understand that, you know. Money is an emotional lightning rod for people. It's, it's, I think it's like the number one or number two, kind of, most emotional subjects that you have. Retirement's in the top five most emotional things that you do in your life, right? I mean, there's big study saying this. So no wonder people get anxious about it. And I suppose I really see my role having changed in that.

And I've got a couple of stories that really kind of landed, but one particularly is that you kind of do all this hard work for clients. You put your time and effort and energy into building financial plans and optimising the numbers and all of this stuff, and you sit down six months later with them and you can just say there's like fear in their eyes still. And I'm like, well, why do you, why do you feel that? What's going on? And because we hadn't talked about the other stuff.

So, the 30 years of work that they've done to get where they've got to, and the 12 months of work that myself and my team have done to put them in a financial position to enjoy their life means nothing because they now feel anxious. They can't spend their money. Their relationship with their wife or husband or spouse is kind of taken a bit of a turn for the worse, because they're now spending more time than ever with one another, and you think about all that stuff.

Us, as an industry and a profession, have a responsibility to be able to kind of talk to these people about this. You know, if we want people to use their money for good and save money and use it, we need to be having those conversations with them.

And so, yeah, it's definitely evolved into that. I wouldn't say I'm a therapist, but I've been called a therapist. I wouldn't say I'm a counsellor, but I've definitely been called that. You know, and I and I thrive in those conversations because I think that's where stuff becomes magic. And you can really see them putting their numbers to, to, to good use.

Mike Ambery: So I love, I love this. Claire, I'm gonna ask you a question because you manufacture the products. You're, you're the wisdom behind what's needed for the consumer.

Do you think we've got the. We've spoken about smoothed funds. We saw annuities drop off a cliff ten, ten years ago with freedom and choice. Where are we now with the products, and is it meeting, sort of, Dan's need and that consumer need for what they need at the point of retirement?

Claire Altman: So you're right about annuities. They did fall off a cliff. But they have come back now with a vengeance. And which is a good, you know, it's right given where rates are. And for people that want to know they're not going to run out of money throughout their life, they're great products. I mean, we were talking about these before. I mean, that in some circles they have a bad name, but, but there is no doubt that they, they answer a specific need. And then you're right with, with smooth funds as well.

I think one of the interesting areas, that will get explored in the coming months, years, is collective DC and the appetite for that. Because obviously there's, there's risk. And, employers, rightly, are thinking that they don't want to overpromise. But I think there'll be a healthy number of people who like the idea that their money can go further because you've got longevity pooling in there as well.

Mike Ambery: Dan, is there anything missing? And do you agree, what would you like or what would your customers and clients like, to be built to enable what you termed experiences and all I love that term, by the way.

Dan Haylett: Yeah. Yeah, I do, I do. I think it's interesting when you talk about, and we were talking about, you know, this being a maths-led, we used to be in a math and a maths-led mindset has caused annuities to fall off a cliff. A human-led mindset should have been that they should have carried on being purchased. Well, it doesn't kind of, you know, you put it in a spreadsheet, it says you shouldn't buy one because you gotta live 20 years. Put it in a spreadsheet so you're never going to run out money, client smiles. Like what? What's, what's the best outcome?

So I think, I think taking the, the maths mindset away, I mean, you can't get rid of it completely because it is a maths kind of thing. And putting the emotions back into it. I do think going forward, I think this kind of the blended opportunities to be able to feel like you don't have to just, you know, have this binary choice. And once you've made that choice, you can't unwind it. I think that needs to be. I know there's things out there at the moment, this exploration where you can have some guaranteed income, you can turn it off, you can turn it back on again, you can reduce it, you can up it. You know, I think that's going to be really important to flex this as situations change.

Because I think when I, when I talk about building retirement income strategies for clients, we talk about that kind of income hatchet. Right? There'll be periods where they've got no income. There'll be periods where they have some income, and there'll be periods where they have lots of it. You know, two one state pension comes in first. Another state pension kicks in thereafter. A DB, small DB they have kicks in at 67. Local government pension kicks in at 67, but they retire at age 59. You've got these different periods. So, to be able to flex guarantees and, and that will be really, really important for people, people going forward.

And that will really help with unlocking the spending, dealing with the emotions, and giving someone just a bit of a roadmap. I talk to a lot of people about the exploring, go-go years, those first kind of ten, 12 years of retirement between the ages of, let's say, 55 to 60 to the early 70s. That's when time and health is on your side and when you should want to be spending your money on these experiences. And that's when you want the most flexibility, the most opportunity to draw money.

But knowing that you can build in some guarantees. And when two state pensions are in and turn on a bit more guaranteed income, if you know at 55 and 60, you can lock that in at some point in the future and you're going to not run out of money. That would be wonderful. And it takes away the number one fear that, like, seven out of ten people are more fearful of running out of money in retirement than dying itself. And a big study was done in the States on this.

And so it leads to everybody underspending. If you're fearful of running out of money, you're fearful of market risks, you're fearful of this longevity. You're fearful of, not having any independence. You're fearful of not having your dignity in later life. Again, ancient brain takes over. You lock it down. You don't spend it. But I think between us as advisers and you guys as product providers, we can actually, I don't think it's particularly difficult. I mean, it is and it isn't, but we can take away a lot of those fears and help them with this real flex opportunity.

And I think as, as we as retirement is moved on to a much more flexible approach - working part time, not working, working a little bit, consulting. You know, I've got people in retirement that have very unpredictable earnings. They're in retirement. They're great people. They do a bit of consulting, they earn a bit, but they're unpredictable. Having that flexibility to match income taking from pensions to earnings that they might be getting to not push them into a higher rate tax banding and stuff. I think that flexibility is going to be hugely important for modern retirement.

Mike Ambery: I completely agree with you. I guess the thing for me, that sort of stands the test of time is people want to have, protection. They also want to have the ability to flex and decide on what they're going to do during retirement. And as you say, some active years, some less active years.

I guess, regulation as it changes. I'd say people that are advised take up advice, probably are more able, to take that fix and flex mentality. We're gonna start looking at default decumulation options. We're also going to start looking at targeted support. Also see dashboards are coming around with more information to consumers to understand what they're building up. And then what can they do with that money?

I guess my question is, is, I'm quite optimistic that, the adviser community will survive and thrive through that. But equally, will guidance kick in and help support that and drive that vision of the modern day retirement, having that sort of fix and flex?

Dan Haylett: You know, I think we need to give credit to ourselves. Right? I think we, we shouldn't really, I don't say we, you, I, do this, but we shouldn't really think that the public don't understand anything. Why people that don't get any advice or don't want it? I mean, they're a group of people that they know their lives, right? They, they live their lives. They know their situation. There's many people that could go and get advice that don't because they don't see the value. There's people that can't get advice that want it, and there's people that will never get it. So, I think we have to give people a bit of credit in terms of they understand their lives and what you know. And I think the opportunity that we have as a profession and an industry is to provide more education.

You know, there's, there's, the world is at our fingertips now. We're a ChatGPT search engine away from understanding this stuff in a bit more detail. You can now, I've done it the other day, playing around. You can now build a model in about 30 seconds. You just feed in your information to Chat B, ChatGPT and it will build you a sustainable income model. Monte Carlo yeah, this stuff is there. We, if we can help change the language. But again, the whole decumulation, if we can kind of make it more human, make them understand it, I think people will want to self-educate them. It's their life. It's their money.

You know, I've got clients that, that I look after, that when I first worked with them, they're like, I don't want to know about this stuff. I just want you to deal with it. And they do want to know about it, it's their life. They've worked hard. So, I think I think there is a huge opportunity for us to be more educational, more thought leading, and understand the human at the end of it in the way that we communicate, in the way that they absorb the information. Because I do think that will absolutely fill, that there's an absolute ability to fill it like there's never been before with guided advice, with product led stuff that is more default, more automated. That actually will do an amazing job for the vast majority of people in our, in our country. We can, as a voice, we can deliver that to them.

Mike Ambery: Yeah. Claire, I'm gonna ask you the same thing. So, the regulation you've spoken about CDC, you've spoken about default decumulation. You've also pushed this with policy, policy makers as well. And, and the response has been really, really positive to evolve this.

Are we now starting to solve this issue of what people need to do at retirement? We've got the products, we've got the availability, is it just now time that we need the legislation to come in. We need targeted support to come in. And with, you know, high quality advisers and guidance. We just need to use it realistically?

Claire Altman: I think, I think that's probably true. And I love your, you know, description of actually, why we think that people don't kind of want to engage more, and that you I think I completely agree with you, you know, it is their lives, and we can make the information available, in a very straightforward way. I'm sure that it will be consumed in that way.

And, and the same if, you know, we can give them tools to be flexible. And all of that exists right now. And then it's just about applying it in the right way.

Mike Ambery: So is it is it just time now? Then we need to speed up a little bit?

Claire Altman: These ideas are, are just beginning. And we're going to just see more of this, kind of combination of the products being available in a more accessible way and then overlaid with, targeted support and other ways to communicate.

Mike Ambery: So the future?

Louise Doherty: The future. I mean, we've touched on it already a little bit. ChatGPT. Yeah. And, I mean, AI, how, how you how do you think you like to use it in your business? Are you really different things? When I talked to advisers about it, some are like, no, I don't need that. And others are completely integrating and everything that we do. So be great to hear another opinion on it.

Dan Haylett: Yeah, I heard something I don't know a couple of months ago. Now I'm going to get this wrong. But something I it's like I don't want AI to do, I don't want AI to write me a blog. I want it to do my hoovering and ironing. So, I, it's kind of that, you know, I think it's like, you know, you. Yeah. So, I think from, I think AI or modern tech is and has and will continue to solve kind of low hanging tasks where I think it will absolutely do that for us as a, us as a business.

I do think the exciting stroke bit trepidation type stuff is when it does start evolving a little bit more, and I think it will do really quickly into planning and, and income. And so again, I think about what I just done with, with, with ChatGPT and fed in some of these scenarios, and it actually done it quicker than our planning software.

But, you know, it's just it is, it is ridiculous the power that it, that it holds. So, I think it's going to go at a pace it's as bad as it's ever going to be. Right? It's only going to get better. So I think adopting it now allows us to spend. The great thing for me, is it allows me to be more present and spend more time with people. So, I now longer. I'm no longer in a meeting worrying about what they're saying. I can actually look them in the eye and take it in without thinking, “oh, that was a really good moment. I better just quickly write that down”. I've got nothing. I don't have anything in my meetings, so I'm, I'm just apart from my phone sitting over the side there that's recording this conversation on a, on a wonderful piece of software that's specifically designed for advisers that gets all of the things that it needs to get from it.

So, I'm much more present. I feel like it's proper coaching, proper advice, proper conversation to people I can understand and listen. I'm properly listening. There's a difference between kind of hearing and listening, right? And, and I think that's where it's been truly transformational for, for us.

It also allows the team to get a better understanding of the client that they've, they're recorded in voice, they've recorded in notes. You know, I encourage our team to look through the notes and before they speak to a client, listen to them, understand them. So, the conversations on the phone have gone up a level with, with, with our, with our client experience team and our clients.

So, yeah. I think it's going to be really good. And then I think it will evolve into planning, for us, and into income. And I think what can becomes really exciting is when it evolves into the, you know, the direct-to-consumer space as well. When you know, they have an ability to take control of their lives to log on.

I mean, I say to people like, I don't do anything that you can't do. Like, you know, I haven't got a magic formula. I've got some experience and some wisdom, but deep down you can do everything I do. You just want some help and guidance and some, you know, some support. But I think that when that stuff gets out to clients in a way that it's intuitive, it speaks to them as humans. That's when it's going to really be transformational for product providers, for if, you know.

If we, if we are passionate about helping people, advisers should embrace this because there will always be people that won't want to do it and want one on one with people. There'll be more than enough of those. But we should embrace this. Work with you guys, work with the public, educate them, and then make sure that they can absorb this stuff and take it in in a way that makes sense to them. So, I think that that's when it starts being really exciting.

Mike Ambery: So, I’ll say with that, I'll say, financial coaching, then, is evolved. If you agree that Dan and do that are my takeaway from that is financial coaching is now spending more time to understand what a customer wants. And technology isn't going to replace an individual. Actually, you know, you, you've done a lot of years of experience to understand the industry and you're replaying that back to someone to guide them, help them, support them, and then advise them to make the decisions, which I agree ChatGPT can present or any guidance can present, but it's not going to replace the adviser that is there to then say yeah, you're right. Well, these are the other options. And these, these are the other products that are available, to be able to do, if I understand that correctly.

Dan Haylett: Our business models need like the way that, you know, I mean, we, we charge fixed fees. I don't like percentage fees. I'm going to come across very, people won't like that. I don't like them. I don't get the more money you have, the more money you pay. Type scenario for advice, right? You have £1 million. It's the same service as someone with 500 grand. They pay this twice the fee, right? What is. What does that mean?

But I do think our business models will have to rapidly evolve. I see a time where the client will go and do some of the heavy lifting, because it's their life. What they want to come in is have a two-hour coaching session on their income plan and numbers, where we can sit down with a flip chart, you know, and take it off the tech and sit down and talk about this stuff. Like who says that we need to make sure that we have this ongoing relationship all the time with people like that? That's kind of the adviser business models are built of this really wonderful, kind of cushion that is this ongoing fee that's been paid that needs to change. I mean, it's just not going to hold up in a modern world. So how we help and support and guide people will rapidly change.

 I think, we were speaking earlier on. I think there's the blockbuster or the Kodak moment coming for, for the advice and planning profession where we need to think very differently. You know, some of the most transformational meetings I've had with my clients, I've sat in the chair and they've been on the flip chart, but they've made the decisions. I've they've said a few things and I've gone actually do want to get up there and sketched. I've got people to do sketches, I've got people to sketch what that means out. Or, let's talk about what you want to do and write your top ten down and what you both to talk about. Like that's, you know, empowering people to make decisions makes them take action. Right? If I tell someone to do something, they're less likely to do it than if they think about doing it. That's me kind of being a parent as well, right?

Louise Doherty: That's kind of coaching mindset, isn't it?

Dan Haylett: It is coaching. It's and I think that's what we are. I think we are deep down when you take the numbers away, because the numbers are gradually getting taken away from us in terms of, you know, the value that we can add and all of that stuff. We were the gate holders, the gatekeepers to investments at one point. Then that got commoditized. And democratised. You know, it's just, all of it's moving and it will all get, and it all will be left is the time with our clients. And how can we make them transform their life through the means of their money and their retirement and their income? And I think our models will have to drastically change.

I can see one off engagements. I can see, you know, typical kind of coaching services that come along where, you know, the tools that I have, the cash flow planning tools, the platform, the investment propositions will all be available to the client at the same price. Right? There's just going to happen.

So then we add value by bringing it all together and having those really good, deep, meaningful conversations.

Mike Ambery: Claire, for you, anything on AI and technology that you think could, give more to a customer or give more to financial coaches?

Claire Altman: I think it's terrific, actually. I'm just super excited about it. And at the end of the day, the biggest point for me seems to be that, it will reduce cost and you'll end up giving more back to a customer because you'll be absorbing less. Technology will, will be, taking up the slack and somebody will just get more for their money. I mean, truthfully, I think that's the way it will go. So I, for me, I think it's, there will be a period of transition, but in the end, it will be, it really will be a good thing.

Louise Doherty: Mike wants me to ask a crystal, crystal ball question.

Mike Ambery: Always need a crystal ball question.

Louise Doherty: It's always, you know, and we've just had a great chat about the future and what what we think is coming. So, if there was one thing that you think will help, in the next five years to help modernise this retirement puzzle what would it be? One thing.

Claire Altman: There is something around property and retirement and, we've got to find a better way for people to be able to use their property in retirement. And at the moment, it's, it's actually just quite hard to see it as part of a retirement picture. So, I think if we can deal with that, it will make a huge difference to a lot of people.

Dan Haylett: Yeah, just on that, there's a there's a movement in the States where the, there's like a, not a fire community, but a very kind of growing community of people that sell their property on the day one. So they release all their equity, sell their property and go rent. So, this kind of, you know, I think we have it a bit backwards from that perspective. It's like we're going to hold onto our greatest asset for a lot of people, right to the end. Yet, actually, why not unlock that at the start? I mean, I know it's it depends on what it does.

But I think that's a really interesting it's, you know, for a lot of people, they get to that point in life and they've got no debt on it. They've paid it off. It's a great asset. They know they're going to have to move and right-size at some point because this thing's going to, too big or whatever it is. Yet. There's, you know, they don't seem to, we've got a very weird relationship with property in this country. And I think if we could change that mindset, it could unlock a lot of, a lot of potential for people.

Yeah, I think. So, for me, this is, this has nothing to do with money. So, I think we need to, I personally think there's a bit of an identity crisis going on. And you're getting lots of people retire or step back from work full time or do what they're doing, and they have no idea who they are. And retirement you are, you are 40% more likely to be diagnosed with depression in retirement than if you're not in retirement. The stats coming out about this, divorce rates, if I think about that. So back in 1990, 9% of all divorces were by, people aged over 60. It's now 40%. So, I know age has kicked on and, but there is this identity crisis.

There's a purpose problem, there's a relationship issue, and they're not having these conversations. So, I think what will help people's outcomes in retirement is to start talking about this stuff early on. Don't do it when you've retired. Do it 3 to 5 years out. Think about what you're retiring with and what you're retiring to.

Think about who you are. Think about how you answer the question at the family barbecue, like, oh, what do you do? And I've had people answer that with I used to be a..., by the way. I mean, they're living in the past, not even in the, not even in the present. Right? So if we can really start to help people think about that, then I think it will transform those first years of retirement and actually is good economically. Right? I think if we can make these people go out there and spend their money and enjoy themselves and feel better about everything, it helps economically for people to do this as well.

So that would be, I think, the, the crystal ball moment for me is that when that shift happens, when more people are talking about this, when more education is out there, we can talk about those, those issues and align people's money with those. It will, it will truly see a big transformation.

Louise Doherty: I think that the word you use earlier that's really stuck with me is joy. And we never talk about that in our industry. Like, we're here to allow people to experience that when they retire. So, when I think about this recording, that's going to be the one thing that sticks with me is, is the human side of it, and it's bringing joy. I love that thought, some of the way that you express that, I think that's fantastic.

Dan Haylett: There's two words, right? Joy and contentment. Those are the two words I would use. People, a good friend of mine, Brian Portnoy. He's wrote some amazing books and he's got a great company called Shaping Wealth, he’s wrote the Geometry of Wealth. He talks about funding contentment, that is the survival of us. Right?

So, the survival wants to fund our contentment. How do we do that? How can we as people help fund people's contentment? And then how can we help them experience joy? Those that's the biggest thing for me that we need to do.

Mike Ambery: We, we talk about that in the industry is better outcomes.

Claire Altman: It's true is absolutely true. But this is this is really what it's about.

Mike Ambery: So would it be better to talk about things as better experiences and better, umm, happiness? Because would that help somebody there? So I guess my question is, is we're going to a world over the next five years, which can be more data available on dashboards and otherwise, hyper-personalisation, which can occur through ChatGPT, AI, simulating data and presenting that back to just general consumers. But how do we build that back to someone who's, you know, 20, 30, 40 who's then thinking, “you know what, I don't really think about retirement as an issue until I'm 55, until I'm 60 and 65”? I think we then start to think of a, a pension or any savings as an experience that you get later in life. I don't know about you. I'm not too bothered about deferring happiness. If we can have happiness throughout and build that happiness, I think that's, you know, wonderful insight.

Claire Altman: I think. What did you say? Funding, funding, contentment and building joy? Oh yeah.

Dan Haylett: Experience and experiencing joy.

Claire Altman: I think it's a I mean, it's yeah, it should be what we're all.

Mike Ambery: There's a different strapline. There it is.

Claire Altman: And I think it's fantastic.

Louise Doherty: Thank you so much. I have thoroughly enjoyed this conversation. Yeah. Joyful. That's what it's been. So, thank you Claire, Dan, for giving up your time to join us today.

As always, you can catch up on previous interviews and podcasts on our website. Just search Standard Life Thinking Forward. And as always, let us know if there's topics you'd like us to cover, or if you'd like to come and join Mike and I in the studio on a future episode. Thanks again.