Acting sooner rather than later is key for later life planning, says Chris Molyneux, Lifetime mortgages development manager.

Planning for later life is about much more than just a pension.

You can help clients consider the bigger picture, from retirement finances to planning their will, equity release to a Lasting Power of Attorney (LPA).

Make sure they understand the value of getting their financial affairs in order well before it’s needed. This means planning for what happens if they die, become ill or lose the capacity to make decisions.

It also means thinking about their overall wealth, including any equity in their home.

Mind the wills gap

Half of UK adults don’t have a will in place, according to reports, which can lead to problems when inheritance issues haven’t been made clear or documented in a will.

Many don’t think they have enough money to make a will, others assume their loved ones will inherit their wealth anyway through intestacy rules, while some think they are too young to worry about it.

Remind your clients that the only way to ensure their estate is inherited in the way they want is to write a will.

Inheritance can become complicated for many reasons, such as following a second marriage, where there are children from a previous relationship, for example. It’s important to ensure that both the spouse’s and children’s interests are protected.

What about an LPA?

An LPA is a document that enables your client to give powers to someone they trust to make decisions on their behalf if they lack capacity.

It’s an important part of future financial planning and they can take out separate LPAs to cover financial and health decisions.

Some clients might not have considered putting in place a Lasting Power of Attorney, especially if they are years away from thinking they need one.

They might assume it can wait until older age, but that’s not always the case.

Future finance planning

Make sure your clients are clear about the fact that they need to plan their future finances while they have the capacity to make decisions.

If they neglect to make a will, intestacy rules will apply, whether or not that’s what they would have wanted.

If they lose the capacity to make decisions before putting in place a Lasting Power of Attorney, they won’t be able to choose who they want to be their attorney. Instead, the Court of Protection will decide and it might not be who they would have chosen, plus the whole process is more complicated.

Remember that wills and LPAs could also offer referral opportunities for you, as well as being the right thing for your client.

The role of property wealth

Planning ahead matters when it comes to making decisions about their property wealth too, which is why discussing equity release early with your clients makes sense.

This might be years before they decide to release equity. Raising it early allows them to think about their options alongside pension planning, making a will and considering an LPA. And it means they can make decisions while they still have choice and capacity.

At Scottish Widows Bank we won’t lend to someone with a dementia diagnosis for example, nor will we allow anyone to enter a mortgage on their behalf.

This is because we are concerned about both their capacity and future challenges.

Some lenders may offer a lifetime mortgage to someone with a family member or representative using an LPA to apply on their behalf. But they will want to be certain that the person with Power of Attorney is not a potential beneficiary, and, of course, they often are.

In other words, it gets complicated.

Five ways brokers can help

1. Check that your clients have made a will and reviewed it in light of any changes (such as remarriage).
2. Remember to talk about using property wealth as part of retirement planning when discussing your clients’ future finances.
3. Explain that it’s a decision that must be made when they have the full capacity or they may leave it too late and limit their options.
4. Discuss whether they want to arrange a Lasting Power of Attorney and run through the pros and cons.
5. Understand the guidance around identifying and managing vulnerable customers, which falls under the Consumer Duty. A good starting point is the FCA’s guidance on the Fair Treatment of Vulnerable Customers. It goes into detail on your obligations and outlines different types of vulnerabilities, including health problems, life-changing events, low resilience and poor capability.

Think long term

Not all older clients are vulnerable, of course, and many won’t need your support with their retirement planning.

But being aware of the challenges and opportunities for your middle-aged and older clients means you can help them plan their future finances in good time, so they’re prepared for retirement and beyond.

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