Are you a Brexiteer or a Remainer? If you are a Brexiteer you are (insert your own description). If you are a Remainer you are (again insert your own description).
I deliberately did not insert my own descriptions. No matter how hard I try my personal bias may creep in, yet every Brexiteer and Remainer I know is different. It is so easy to categorise and then come to wrong conclusions.
There are many other characteristics that influence their behaviours: ethnicity; gender; religion; socio-economic grouping; education; age and health. The number of permutations is such that it is hard to believe that we are not all unique.
I regularly go to our local stand-up comedy club. A couple of years ago there was a comedian who was a cut above the rest. He was an Indian doctor who had ‘come out’ twice. First by announcing he was gay. The other was by giving up medicine to become a stand-up comedian. His father was also a doctor. The humour comes from how he believed his stereotypical Indian parents would react to these announcements and his discovery of the shocking liberal attitudes they held.
Another memorable performer is a disabled man in a wheelchair. His act uses the audience’s attitudes to disabled people into laughing at themselves. He has a luxury car, big house and lavish lifestyle all paid for by audiences that come to laugh at a disabled man in a wheelchair.
For every stereotype that is created there are large numbers who are exceptions to the rule. Nothing annoys me more than politicians who tell me how I think. “People want this, people want that,” we’re told. They never speak to me so how do they know what I want? Similarly, when shopping online the screen that appears saying: ‘People like you also bought’ is annoying. How do they know they are like me? I admit this is happening less often, so possibly marketing departments are learning how it grates with people like me.
A couple of years ago we were being told that millennials were a new species of human beings, in particular, their attitudes to financial services. Now they are held out to be more responsible than previous generations. Which is true? Probably like all generations you can find a number of people to prove your case.
When it comes to retirement and later life not only do you have all the characteristics that I describe, you also have the experiences of 40-plus years of adult life. How many times have they been in a permanent relationship? Are their parents or perhaps their grandparents are still alive? How many children, step-children, and grand children do they have?
What disabilities, if any, do they have? Some may have had to give up work before age 50. Others may be able to work well beyond age 75 with no hardship. Some of these may want to pursue another lifestyle; others dread not going to work. Statistically it should be possible to identify that 95% of the population will retire between ages x and y. X and y are probably around 63 and 67, but the changes to State pension age means it is difficult to find reliable up-to-date research to justify this.
For many people the State pension is by far the largest component of their retirement income. Therefore, many cannot afford to retire before it becomes payable. Others have the mindset that State pension age is their retirement age and therefore retire sooner they may really want to.
For policymakers and product providers the 95% numbers are important. Getting the policy and products right for them is a desirable objective. However, for those who give financial advice and guidance in retirement they are irrelevant. It is the person or couple sitting in front of them that is important. All their characteristics make them unique.
In some Far Eastern cultures shame is brought upon the family if older parents are not taken into the family home by their children. Therefore, the sale of financial service products is geared towards supporting the best education for children, increasing the probability of them being in well paid employment rather than saving for retirement. A client influenced by such a culture will be entirely different to one who believes their house is their children’s inheritance no matter how small their retirement savings.
It is not just the client in front of you that will influence decision-making. I have come across siblings who have fallen out over the use of their parent’s wealth. The poorer of the two had no qualms about using equity in the parents’ house to make the final years of their life as comfortable as possible. The wealthier of the two didn’t want anything to happen that would dilute their inheritance.
Mathematically, and from a stereotypical behaviour point of view, solutions may be put forward. However, such solutions may be totally inappropriate for that unique client sitting in front of the adviser. ‘Know your client’ is never more important than in the approaching retirement and later life markets.
Unique clients illustrate the difficulties regulators and compliance officers face when looking at this market. It is also the reason why people approaching retirement need a good financial adviser. Make sure those potential clients know where to come when they need advice.
Bob Champion is chairman of the Later Life Academy (LLA)