In this webinar Steven Cameron, Pensions Director, and Dr Thomas Mathar, from our Centre for Behavioural Research, walk through the impacts of a multi-stage life and strategies to help support your clients with the opportunities their Second 50 can bring.

We explore:

  • The switch from a traditional three-stage life to a multi-stage life and what this means for your clients.
  • Our Five Fundamentals to prepare clients for their multi-stage life.
  • How to help clients mentally prepare for their multi-stage life, including understanding a money mindset, what makes clients happy, a long-term horizon and money attitudes and beliefs.

Learning objectives

  • Understand the shifting retirement landscape – as we move from a traditional three stage life to a multi-stage life and the fundamentals to help your clients. ​
  • Delve into the future self and how understanding what makes us happy can help frame our goals and objectives. ​
  • Explore the move from a performance maximiser to a wellbeing maximiser and the role you can play to help mentally prepare your clients for a 100-year life. ​

Steven Cameron (00:07): Good morning, ladies and gentlemen, and welcome Aegon UK's latest webinar for advisers on preparing clients for the hundred year life. I'm Steven Cameron. I'm pensions director at Aegon. And I'm going, to start off the session by talking a bit about the Second 50 as Aegon calls it. Delighted to be joined by Dr. Tom Mather, who, who's head of our center of behavioral research, and Tom's going bring to life Aegon's focus on wellbeing and how that fits within the Second 50. Along the way, we'll be sharing some insights into where we think the retirement market is going and what that would mean for you and your clients. Now, as with all of our webinars, this will qualify for CPD. So if we go into the next slide, that will show you what the learning objectives are this morning. Um, the webinars due to run for about 45 minutes, so you'll get 45 minutes of structured CPD, um, and you can claim your CPD.

Steven Cameron (01:05): We'll be posting a link to the certificate in the, the chat. So please feel free to go into that and download that. Towards the end of the session, we'll also be recording today's video and we'll be making today's webinar and we'll be, we'll be making this available on, uh, the Aegon UK CPD hub. So if you'd like to look up again, or if you've got any clients, uh, not clients, any colleagues who might want to look at this, we don't really want you to share this with your clients. Um, please feel free to, to put, to signpost them to that, and they can look at that at the leisure. If you do have any questions on the way through, feel free to post these in the q and a. We hope to have a few minutes at the end to answer as many questions as possible.

Steven Cameron (01:48): So what do we mean by the Second 50?

Steven Cameron (01:56): Nice little picture of the Scottish countryside there. Okay. So, Aegon strategy is all about, the fact that individuals, uh, generation by generation, we are on average, living longer. You'll have heard of the hundred year life, and nowadays, one in four children who are born can be expected to live to almost a hundred. So the idea of a hundred year life is no longer science fiction. It could be reality for an increasing number of your clients. Now, I might be a bit biased, but I don't think reaching age 50 is old. I think reaching age 50 could be, you could only be halfway through the hundred year life. And that's why we've called it the Second 50. So, the other, thing is that we think that around age 50 might be the time when individuals start seriously thinking about, what is my later life going to look like?

Steven Cameron (02:49): Have I made sufficient provision? What's it going to mean for them? So we wanted to kind of capitalize on this kind of milestone age. We think that, this stage of life is one which compared to previous generations, has many more opportunities, but also challenges compared to parents and their grandparents. We reckon that those entering the Second 50 now will have a very, very different, future life than those of previous generations. And in many regards, we regard this as uncharted territory. And that's where advisers can really play a key role in helping their clients navigate that uncharted territory. So we wanted to explore this, and to kick things off, we commissioned some research by an organization called Cicero, who surveyed 1000 individuals about what they thought about later life. We joined it up with the latest national statistics, and that's where we came up with our first Second 50 report. We always said that this was a conversation that we wanted to start. It wasn't a one and done. So we wanted to make sure that, the Second 50 started that conversation and that we could reach out and can discuss this with different audiences, which is one of the reasons I'm so pleased that we're doing that us today with advisers. So clearly you can access the full report at your leisure. I wanted to just bring out a couple of key findings from the research.

Steven Cameron (04:18): The first aspect is that, as well as living longer, which clearly is something that we should be celebrating. Our lives are becoming less linear and more varied. So traditionally, we talked about the three stage life. So people would have a period in education at school or, or perhaps further education, they would then stop that and they would move into work. And if go back far enough, that was often a job for life. And whether that's changed dramatically over the recent years. You'd work for a period and then your employer would decide when it was time for you to retire, indeed, give you your pension, and, and that would be that. And it was very linear and very, very, straightforward in some ways, but quite clearly, as we all know, that that kind of linear three stage slide is a thing of the past.

Steven Cameron (05:05): And we're now living much more multi-stage lives. And the diagram on the right of this slide is aiming to show that rather than a straight line, we're now in a kind of mapping, and the individuals will move around this map as they move through their life. Yes, of course, we will all start in the education zone, but when we move into work that's not a one-way movement, we will often move back into some kinds of, of education, whether that's on the job training, whether it's upskilling for new opportunities. Equally, once we're in the work stage and we move into retirement, that's, again, not a one-way, journey, but there will be some individuals who move into retirement and then move back into work. We'll also find that there are many people who, when, when they're working, they will go through different aspects of this.

Steven Cameron (05:53): Some will take clear breaks, some will have lots of different jobs. Another thing that we've found in our research is that individuals nowadays don't think of it as we will reach a certain point in time and we will stop work entirely, a kind of clean break from work. Only 27% of people want that kind of hard stop retirement. And the rest of the individuals we surveyed are looking for a transition into retirement. Some of them actually say they'll never stop working, that they'll never retire. But a lot of people now are thinking of a transition into retirement.

Steven Cameron (06:28): We're also seeing many more people working beyond traditional, uh, retirement ages beyond state pension age. But at the same time, particularly around the pandemic, we had a spike in the number of people in their fifties who had left economic activity, who had left the workforce. We will be tracking that going forward because we do envisage that some of those individuals may want to rejoin the workforce at some later stage. Now, quite clearly compared to the left hand side, the right hand side is a much more complex journey, and individuals will need help making some of the key decisions, and some of those decisions will have significant financial implications.

Steven Cameron (07:07): So the next lot of findings I wanted to share, and I don't, I don't think this will come as much surprise to you, but what we wanted to do was to just ask individuals what their key concerns were and key aspirations for retirement. We've been tracking this for a number of years. So this slide compares 2022 with 2023, and the key, aspirations, no surprises here. Spend more time with friends and family, traveling, pursuing new hobbies. In terms of, later life concerns, the key concern that come out this year, as with last year, was running out of money. And you'll see that that has actually got worse in 2023, perhaps because of the cost of living crisis. The others two consistently in the top are concerns about declining physical health and not being able to do the things that I enjoy. So you'll see that there's a mix there of financial concerns and aspirations and non-financial. The other thing I would highlight here is that the aspirations in particular are pretty vague, and I'll come back to that in a later slide.

Steven Cameron (08:13): So the next slide gets into the real meat of the Second 50. We did all the research, we did all the analysis, but we had so much data that we wanted to find a way of trying to make that accessible to different audiences. So what we did was we identified five key drivers, which we called the fundamentals, which we think will shape the Second 50 within each of these. And the five are work, wealth, health, family, and wellbeing. And within each of these, there are a whole range of individual variables which will be relevant more or less, and at different times to each individual one of us. You'll see in this, and this, this is supposed to be a compass. Talking about the navigation here, you'll see that in the heart of this, we've got, uh, elements of each of the five fundamentals, which are quite personal to the individual.

Steven Cameron (09:06): And round outside, we've got some environmental factors which are also changing, which will impact these five fundamentals. When we produced the report, I did some, quick rough calculations. I wasn't allowed to use them because I couldn't get them through our compliance department, but I worked out there were 29 million different ways that you could, you could move through your Second 50. And don't ask me to prove that, but that shows that there are more ways of moving through your Second 50 than there are people above, uh, 50 in the UK at the moment. So I'm going go through the five, not the 29 million in term. So starting off with, with work, what's the, the work fundamental? This is about clearly how your employment and how you've worked through your first 50 and thereafter will impact on your Second 50. So that would depend on whether you've been self-employed, you've had some part-time work.

Steven Cameron (09:59): It would depend on the kinds of employers you've worked for, and what employee benefits they've offered to you. But it will also very much, link into this point I was making about the transition that people make from work into retirement and how they go about doing that. Looking at the second one, wealth, I want to stress that our Second 50 Report is not just for wealthy people. This is people of all levels of wealth. And what we mean by wealth is, first of all, any pensions that you have, whether these are private, workplace or state defined benefit contribution, but also any other savings that you've got, long term savings that you might draw on and retire. It's also about other assets that you've built up during your, your earning years. And the most significant one is whether or not you reach a particular age and own your own home.

Steven Cameron (10:51): That can have a big bearing on your Second 50. We also wanted to explore the fact that some people are expecting to receive an inheritance. Others want to start passing wealth down the generations while still alive. So passing on an inheritance to children or even grandchildren. And wealth will also be affected by what's going on in the external environment. And of course, in the last couple of years with the spike in inflation, for example, and in interest rates, that will impact on how long wealth you've built up might last as you move through your, your Second 50, the third fundamental health. Now, obviously this is another big factor, and while most people expect and hope to have a good few years in good health when they move into retirement, as we move through life, the chances are that we're more likely to have a more significant health condition that we have to allow for.

Steven Cameron (11:48): So I think it's important that individuals realize that they're less likely to want to go and adventure as holidays in the late seventies, than they are in their early sixties. And the more that people, understand that, the more they can think about ticking off items on their bucket list, or whatever you call it, at the right ages, and not leave everything too long and find that they're just not able to do some of the things they want to do. Some statistics that we have in our report, those in their fifties expect to spend the sixth of their time in later life in ill health. Over 82% are somewhat very concerned about health in older age, but only a quarter have built any allowance for funding social care into their retirement plans. And I will come back to social care in a later slide.

Steven Cameron (12:33): Family, also a big influencing factor. Uh, if you have, uh, children, if you have a partner, if you've got grandchildren, if you've got parents, who are still alive there can be hearing responsibilities. And there can also be financial, uh, responsibilities to consider. Adult children quite clearly are finding it harder to get on the property ladder, so that can have a bearing. And within our report, we talked about the sandwich generation, which often are those who are around age 50, who've got children and parents who are caring for. Since then, I've heard people talking about the club song generation where you've got even more generations that you might be thinking about. So I quite like that term. I wish we had found, I wish we had used it. The final one, which is again, a really important one is wellbeing. And this is what you want out of your Second 50. It's what's going give you joy and purpose. And quite often what will give you joy and purpose in your Second 50 will be different from what gave you that happiness in in earlier life. Tom's going talk about this in detail, so I wouldn't say anymore about that for the moment.

Steven Cameron (13:41): Okay. So, having done the research, we wanted to speak to different stakeholders. And so I wanted to talk about the key considerations for three different groups of stakeholders. And the first group will be employers. As part of our Second 50 work. I've had some really good discussions with a number of employers, with HR professionals, and also with organizations like pro age to explore this in more detail. One area of growing priority is that we're finding more and more employers want to factor age into their inclusion and diversity policies. It's not got to the top of that list. There are other aspects which have been prioritized, but age is beginning to grow as one that needs considered. And the sooner that you start thinking about age, the sooner you can build that into your recruitment and retention, policies, and create that more diverse, diverse workforce.

Steven Cameron (14:37): One of the angles that frequently comes up in conversation is that sometimes the language that we use unconsciously could create age bias. If you put out a job advert and it uses certain words, the chances are you will get, get no one over 50 applying for it, because they'll think it's designed for younger people who and not for them. So that's one really important and hopefully simple thing which we can begin to address. And Aegon will be exploring that in more detail as, as the year goes, goes forward. Quite clearly the employee benefits that an employer offers, including pension, but also health benefits can have a big bearing on on how we approach and, and move into our Second 50. But another aspect which employers can help with is how flexible they offer in terms of their working patterns. And if they offer hybrid working, flexible working can be really helpful for individuals who have caring responsibilities and also hybrid working can help for individuals, particularly those perhaps who've got a, a lengthy commute and get to a particular point in life and think, I really don't want to have to, to travel an hour into work and an hour back.

Steven Cameron (15:44): So being able to work on a hybrid basis a couple of days a week from home can also have a big bearing on those approaching the Second 50. I've talked about the importance and the traction of transitioning into retire employers who offer that and to actively promote and encourage it, they can be doing a lot to help people move into that Second 50. And the final one I wanted to touch on is the helping employees engage with their future selves. If employers do feel that they can help their employees prepare for life after work, that can go, a long way to helping with that, that transition. And they may see that as a broader, an aspect of their broader ability to, to help with financial education, which can be offered on a timely basis.

Steven Cameron (16:35): Moving on to the next group of stakeholders who are government and regulators. Now, this is kind of my day job, speaking to government and, and regulators, and particularly right now with the election looming. I've got a lot of focus on this and it's good to see, not surprising because of the importance of the gray vote, but good to see that the, the election campaign has focused quite significantly on pensioners. The sorts of things that we campaign for are for the government of the day to make it really clear, about the state pension. The state pension remains the bedrock of retirement incomes for most individuals. So we need clarity on the triple lock. We've got that for the next five years. All parties are committing to keep the triple lock. We also need to be clear on, future plans for raising the state pension age, and we've not got as much clarity there.

Steven Cameron (17:30): What we would ask is that, that any increase that individuals are given at least 10 years notice so that they can factor that into the decisions they need earlier in that Second 50. One of the other aspects which Aegon has been campaigning for, and it is linked to our Second 50 work, is we'd like individuals to be given the option to take the state pension a little earlier at a reduced level to make it financially fair up to three years early. And the reason for that is that we're very conscious that nowadays everyone's Second 50 is different and everyone's plans to move into retirement are different. So why should everyone need to wait to age 66, 67, 68 until they can access their state pension?

Steven Cameron (18:14): Another key area, uh, for government influence is the deal on social care funding. And again, I would really like whoever's in power to make it clear, what an individual will need to pay for future social care and what the state will pick up. The Conservatives did have a deal, which they say will still introduce in October 25 if in power and Labour have have talked about. They wouldn't do it any sooner, but I'm not clear if they would follow the, the Conservatives lead on this one. And finally, another government intervention is around the likes of auto-enrollment and making sure that individuals are saving adequately for their retirements. I'd really like to see the 2017 enhancements to auto-enrollment prioritized. That's moving the minimum age to 18 and removing the 6,240 pounds salary offset. And I'd also like to hear views on the next step for auto enrollment enhancements perhaps increasing the minimum contribution to 12%.

Steven Cameron (19:11): I'd like to see plans to extend auto enrollment to the self-employed. And another big consideration is housing policy, because as I've already mentioned, if you reach, your Second 50, or if you reach retirement and you don't own your own home, then that's going have a big bearing. So home ownership does join up with retirement policy.

Steven Cameron (19:34): And my final slide is around considerations for adviser. So we've got to the punch line, if you like, and so Aegon would like every individual to be able to picture their future selves, and we'd like them to be able to do that in a concrete way, but we know that many people struggle with that and advisers have a unique role where they can truly help individuals not just have a vague picture of the future self, but to come up with some concrete vision of what their later life might look like and what they want from it. Having done that, advisers are also in a great position to help turn that picture into reality by working at how to help fund that. You'll noticed on the way through that we've talked about financial aspects and non-financial aspects. I'm sure as advisers, you're already very conscious of this.

Steven Cameron (20:27): It's not all about the money, but money does remain very significant. There's a couple of, regulatory initiatives on the go, which, which we think are very aligned to our Second 50 work. The first is about the, the retirement income advice thematic review. Those of you who've who've studied that will, will, will have seen just how detailed the FC expects advice on retirement to be and just how personalized they expect advisers to go when advising clients when it comes to retirement income. And I think our Second 50, we hope that the kind of five fundamentals and the framework that we've created might, uh, give you some additional ideas about how to truly create that holistic picture.

Steven Cameron (21:11): We also see great alignment with the FCAs consumer duty. How can you avoid foreseeable harm if you can't picture your future self? And how can you support clients meet their financial objectives within the context of their life objectives? And in terms of foreseeable harms, I see not being able to afford your contribution to your social care funding as the potential next big foreseeable harm that we could see in the retirement income space. So in conclusion, whether it's work, wealth, health, family or wellbeing, I see a key role for advisers in helping people make the most of their Second 50. And on that note, I'll hand over to you, Tom.

Thomas Mathar (21:55): That's great. Thank you so much, Steven for that. It's, yeah, always fascinating, to see that transition from the multi-stage life, sorry, from the three stage life to the multiple stage life and all its, implications. There are, in fact, I want to speak a little bit about some of those implications, especially as you can tell here, you know I'm a behavioral scientists. So I'm more interested on the money mindset side. But you know, what I would say, perhaps as a bit of a soundbite that long-term financial planning and perhaps long-term retirement planning or retirement planning in general, is much more of a mental challenge rather than a financial challenge in that, you know, multi-stage life that we are increasingly transitioning into. It's not me only who's saying that, uh, it's also, you know, we did earlier in the year, a bit of research among Aegon customers.

Thomas Mathar (22:46): So this is now another study than the one that Steven has mentioned earlier. We surveyed, here customers aged under 55. So more a bit of a focus perhaps here on the first 50 rather than the Second 50. But, what we asked was a simple question in terms of, you know, do you agree that life planning or financial planning is now more difficult than it was 20, 30 years ago? And what you see here, of course, is that yeah, a large proportion, in fact, two thirds vast majority agree that life and financial planning is more complex today than it was 20 to 30 years ago. And I think one of those reasons, or two of those reasons have already been touched on. You know, there's longevity. You know, the fact is we are living longer, longer, healthier lives as a group.

Thomas Mathar (23:30): And, that, you know, in itself means, uh, you know, that we need more money for the simple fact, you know, uh, when you live longer, you need more money. The other is those, you know, this transition of the three stage life to the multi-stage life, of course, is is a massive challenge, right? Because there's less certainty, uh, you know, we are not just having one career, we're having multiple careers. We're having transition points in between where perhaps, you know, reeducating because we want to, perhaps we are burning out, of, you know, in a job. Perhaps we are made redundant because of AI or the rise of robots or whatever. Perhaps, you know, we're wanting to take time out because, we're wanting to take care of the children, or perhaps we're needing, to take care of an elderly relative and the family, et cetera.

Thomas Mathar (24:15): So all this is happening, okay? And this is the, this is why, this is why the multi-stage life is such a, such a massive challenge. I would say perhaps also one reason the, uh, times now are more challenging than they were 20, 30 years ago is because we very much live in a, what Nicholas Rose, uh, the sociologist at the London School of Economics called a regime of the self, right? When 20, 30 years ago, um, you know, it, there was the state, there was the employer, there were other, bodies who kind of had our backs, okay? So who took care of us, but now the burden is very much on us, okay? So it's, it's, it's, we are, we are the captains of our, uh, long time financial plans. And, we cannot rely so much on the state and so much on the employers, et cetera.

Thomas Mathar (25:03): That is, I would say, a massive mental challenge. You know, in addition to the financial challenge. And arguably, as I say, you know, the mental challenge perhaps weighs heavily more heavily. We ask this question, uh, you know, which of these ponderings and reflections, which in essence are reflections on, you know, financial security now versus financial security in the future, or what makes me happy now versus what may make me happy long term? Okay? So these sort of pondering, these reflections, these trade-offs, however you want to call it, is, are reflections that a vast majority of people are, you know, aware of or, you know, are encountering in their everyday lives. And you know what, I would say this hints at a massive opportunity for financial advisers. Yeah, I would say it's an opportunity that is, you know, transitioning away from the value proposition of a financial adviser from, you know, 20, 30 years ago, and perhaps arguably 20, 30 years ago, you needed a financial adviser to get into the markets.

Thomas Mathar (26:04): There's been a lot of democratization happening in that space. You know, you do, there's DIY propositions, there's, you know, robo advice. There is many, many solutions being offered through employers, et cetera. But this is, you know, more, you know, technical and functional. Uh, what, what is being offered in that space. What perhaps is the much stronger value proposition of a financial adviser of the future is that, you know, that, that really thinking about how to consolidate a financial plan with life plans, or how to consolidate the financial side with, you know, the quality of life now and quality of life in the future, the deeper emotional needs, perhaps those mental challenges, perhaps in essence, uh, financial planners of the future are perhaps much more life planners with a strong financial component rather than, you know, the classic alpha where it's all about, you know, this is a bit unfair anyway, but a bit, you know, where it's, where it's about, uh, performance of a, uh, policy portfolio versus a benchmark portfolio, asset allocation costs, et cetera.

Thomas Mathar (27:08): This, this is still important, but it's less important in it, perhaps in a multi-stage life. Where the challenges associated with, financial planning are oftentimes more on the mental side and identifying priorities, goals, and how to reconcile financial plan with, um, life goals. When, when we pose this question, to those who took part in the survey, again, you know, large agreement broadly with a statement that, you know, a financial adviser, if I had a financial advisor, this was largely an unadvised population that we surveyed, we would look far less into wealth maximization. That would be less important. Much more important would be, you know, someone who coaches us and helps us along the way. Yeah, reconciling the two, life planning and financial planning, living a financially stable, but also, you know, happy and enjoyable life now and in the future, rather than just maximizing wealth.

Thomas Mathar (28:05): So what does it mean, what does it mean for an adviser? We mock this thing up here. So this is an example of what it may look like for you when you, uh, you know, present a financial plan to, um, a client perhaps in a, you know, in a client review meeting or, you know, perhaps, um, a year or so after having offered recommendations, first recommendations. So at different points. So you see, what you see here is an attempt to reconcile both the financial side and the deeper life goals. Okay? So you see here, uh, in the center, of course, what is the financial situation, but you also see, you know, how do, how does the financial situation relate to what the clients, I call it here, the principles, but call it values, call it centers, call it, you know, there's different ways.

Thomas Mathar (28:55): Steve Covey and, you know, the seven habits of Highly Effective People speaks about different centers. You know, some people can be family centered, they can be work centered, they can be community centered, they can be, I don't know, faith centered. They can be wealth centered or money centered. Okay? That's not in itself bad, but so, so different people have different centers. What are the centers? Well, in this case here, the principles, then we have then we speak about goals, and goals are of course, more, you know, project based and perhaps have an end date. So, so what are some, what are some goals? Something that you know, is more clearly identifiable and has perhaps a more clearly identifiable endpoint. So you identify those also in a financial plan, you give a bit of an on the right hand side, you give a bit of an overview on, uh, you know, where they are on their journey.

Thomas Mathar (29:42): Uh, again, addressing both money and mindset or addressing the financial side as well as the emotional and quality of life oriented, uh, side. Uh, and then perhaps, uh, initially counterintuitively, you have there on the bottom of right side a suggestion, which isn't my suggestion, by the way. I heard this from Meghan Lords and I, uh, uh, in a, in a podcast, she mentioned the need to also consider the next 18 months. And I think this is a tremendously good recommendation because, you know, we are perhaps, a bit biased when building financial plans and thinking about the long term, right? And I think the risk here is that when thinking long term, that, there's a few things. Uh, first of all, we find it, you know, hard to identify what actually makes us happy.

Thomas Mathar (30:35): It's easy for us to say what makes us happy. But, you know, this is perhaps in essence what behavioral science teaches us that we are rather than evaluating our lives. And rather than, you know, paying attention to the things that make us happy. Rather than that, what we would do is we would refer to all sorts of reference points, right? What about the others? What about, you know, what, what is being offered to us in the choice architecture? Um, all those, yeah. Reference points that perhaps actually are irrelevant for our own financial wellbeing or wellbeing in general. So the point here being that we've got to learn to pay attention to the things that make us happy. And one way you can do that is by identifying goals, short term goals, like 12 to 18 months, goals of, you know, what, you know, what could be a goal, a happiness related goal that would be valuable to fund in the next 12 to 18 months.

Thomas Mathar (31:26): Okay? The other, perhaps more philosophical side here is that, yeah of course we live longer, healthier lives as a group in general, that's true. But the fact is also, we're not just living in the future. Yeah, we are also living now. Um, and, uh, it's not just about deferring gratification, delaying gratification, it's also about having a good life now, which is, you know, in essence, really why those trade-offs between, as I said, financial security now versus financial security in the future, happiness now versus happiness in the future. It's awfully complicated trade-offs. Oftentimes what we're doing is we are deciding, uh, in favor of our future selves. Ironically, perhaps, you know, when we are thinking about funding happy, uh, a hundred year lives. So Paul Dolan, you know, professor of, uh, behavioral science at the London School of Economics puts it nicely when he says happiness lost.

Thomas Mathar (32:15): Now is happiness lost forever, okay? So you cannot just delay it, you know, you are also living a life now. And the third point, why I think it is useful to also pay attention to the next 18 months is because it kind of is in investment into your future self. You know, to have those experiences that make you happy. Now, you know, and over the long lives, you know, these experiences will also matter and enrich life. The memories of it, the experiences of it will enrich life long term.

Thomas Mathar (32:45): Okay? So I think, um, this, I mean, very briefly, the what, what, what I would advocate a view on money, as money being an ingredient. Yeah. An ingredient for a good, happy, long life. Okay? So not the only ingredient, but like, you know, this is why I use the bread metaphor here. Like, you know, yeast or salt or so isn't the only ingredient for a loaf of bread. It is just one ingredient. And the same applies to money and a long, happy life. It's just one ingredient, and it is one of many ingredients. So what are other ingredients? So as to live a financially well life, something that you as advisers can pay attention to and can educate your clients and coach your clients on so as to fund, uh, enable them to fund their long happy lives. And you know what, this perhaps sounds a bit esoteric or head in the clouds, but what I will say is that self-knowledge is a really important type of asset class.

Thomas Mathar (33:46): Yeah. For successful 100 year life self knowledge. And I will just highlight three things here. Self knowledge about three things, and the first one is self-knowledge about the things that impede you. Okay? So this is, I mean, I'm just using here the example of good offers, but good offers are they, they, they are a good example, right? I mean, I think perhaps taking a step back what's happening here with good offers, but what's happening in general, very often, uh, nowadays, is that there are so many very clever mechanisms that compete for our attention. Yeah. And because they're competing for our attention, we cannot pay attention to the things that, you know, actually matter. Yeah. And, and by the way, I love it that in the English language, you say you pay attention, right? Because the fact that you say you pay attention highlights that attention is, is a scarcity, right?

Thomas Mathar (34:40): So we've got to be economic with it. Yeah, but we cannot by definition, you know, pay attention to the one thing and also pay attention, pay attention to something else. Yeah. So, I don't know have, you know, a night out with my partner and at the same time answer emails or something like that, right? So that, that doesn't work. We cannot, by definition, pay attention to more than one thing. But the fact is, we live in mechanisms in, in, in a world where clever, oftentimes behaviorally informed mechanisms compete for our attention. As I say, I've just used here, uh, great offers as an example, you know, as seen on tv, which is where the reference point is, you know, a social norm and sort of authority that really shouldn't matter. Yeah. It was 139 pounds. It's now 89 pounds, right?

Thomas Mathar (35:26): It shouldn't matter what, what the price was in the past. What matters is how much I, I'm willing to pay for it. And you see other, other examples here, I would, I would ate that buy now, pay later wasn't something that was invented by a financial adviser, but you see it of course, everywhere. Yeah. So the, this, this whole notion of, um, yeah, appealing to, uh, appealing to immediate instincts, and I think it is something to be very aware of. Um, you know, what, what are those instincts that are being appealed to? And I think you as a financial advisor, you may want to pay attention to the instincts and the biases, and perhaps, you know, fallacies, classic sort of, terms from, early behavioral finance, you know, that that may be in your client. And we have, uh, by the way, on our website, we have financial wellbeing site, there is a template, um, that has a few, biases and, uh, you know, that, that allows you to work with these.

Thomas Mathar (36:25): So to identify what sort of biases and instincts may there be in your clients. And perhaps we can post this here in the chat as well. So you have it. The other thing that I think is really important, as I say, I'm speaking about self-knowledge as a type of asset class for a successful, uh, 100 year life. Um, the other thing that I think is really important is knowledge about the things that make you happy. And you know what I realized that this notion of, you know, what makes you happy, and you know, that, perhaps it sounds a bit shallow, perhaps a bit like , like Pharrell Williams, you know, the, the happy, happy tune. But, so, but there's, you know, you can, you can think about this deeply. Uh, what makes you happy. And again, I would refer to the work that comes out from Paul Dolan, London School of Economics, who has defined happiness as a sort of even balance of things, activities, experiences that give you joy, uh, gratification, relaxation on the one hand, and on the other hand, experiences, things, activities that give you purpose, right?

Thomas Mathar (37:28): That make you feel useful, that make you feel competent, that make you feel worthwhile, et cetera. You want to have a sort of like, even balance of these things. Um, and by the way, this doesn't need to be, uh, you know, noble and, uh, you know, very, uh, big things. It can be quite mundane and banal things, right? So, uh, you know, the, the, the school run in the morning right? Isn't something that makes me happy on a deeper level, but, you know, I feel, I feel slightly competent every time I've done it, you know, and, and useful. So it's like, you know, even awareness of little things like that, little experiences and activities like those, you know, can, uh, to capture those and to be aware of those, um, is something that, uh, I think is important for successful 100 year life.

Thomas Mathar (38:17): And I think you as an adviser, you want to pay attention to those things, experiences, activities, um, in your clients' everyday lives that you get the impression, you know, either contribute to pleasure, um, relaxation, joy, gratification, et cetera, or a sense of purpose. Yeah. I put this in here with the millionaires formula. I don't know if you're aware of it, but there's this, you know, those, those, those those clever devils who say that, you know, when you, um, when if, if you don't get your cup of coffee on the way to work, you would save every day three pounds. And the three pounds over the course of a month are 90 pounds. And over the course of, I don't know, um, 20 years, if you put that, put those 90 pounds into a retirement plan and let it compound, then those 90 pounds every month turn into whatever, 40,000 pounds or whatever, whatever it is.

Thomas Mathar (39:10): So the, the, the point here is, of course, this is mathematically correct, right? This will be a mathematical correct, you know, compound interest rate calculator type calculation. But the, the question is perhaps the coffee on the way to work is a good expense. Yeah. So it may be contributing to happiness, you know, if for example, you know, that's that element of self care on the way to work, or perhaps it is, you know, a moment of relaxation after an already stressful morning with the kids or whatever. Or perhaps you want to contribute or, or support your local cafe or whatever, right? So it could be a useful expense, but it could also not be, yeah. So it could be a waste. So the point is, it depends. And, you know, it's, it's the client who should know. It's you who should know.

Thomas Mathar (39:57): It's, it's, it's that type of self knowledge that we would need to have, uh, so as to be able to say, you know, whether or not an expense is worth having, yeah. Whether it's worth spending money on that or not. That's element number two on the self-knowledge and element number three of self-knowledge. Steven mentioned it already. I think it is really important to have that strong and meaningful connection to your long-term future, to your long-term future self. And this is something that we're finding really hard to do. There's this beautiful research that comes out of Hal Hirschfield in the, in the states of behavioral scientists and psychologists who has slotted people under an FMRI scanner, and found that if people, uh, think about their future self, they activate a part of the brain that thinks of strangers. Yeah. So, you know, it's much more likely that we are, we we're not having an intrinsic connection to our future selves.

Thomas Mathar (40:52): In fact, you know, our brain processes information about our future selves the same way as it would process information about strangers differently. Put, uh, you know, to encourage people to save for retirement, to save for the future selves as good as telling them to give money to a stranger in the street, okay? It's mentally hard. It's a, it's a mental challenge, but it is something that can be, uh, trained. So a future mental time horizon, um, is something that can be trained and learned. Um, and this is something where, uh, you can help. Okay? And I think the way you would, you're much more likely to be helpful is by appealing to things, experiences, activities that intrinsically motivate. So it's not about, you know, by the age of 65, you want to have a retirement pot size of whatever, 750,000 pounds. That's not it.

Thomas Mathar (41:40): You want to think about in five years time, in 10 years time, in 15 years time, where will you be? Um, what will you be doing day in and day out? Uh, who will you be spending time with? Uh, is there going be a pet? Okay. So things like that. So quite, um, uh, banal, perhaps a bit more, you know, intrinsically motivated things. So you want to have, you, you want people to your, you want your clients to create that vivid and concrete connection to an intrinsically motivated version of their future self. So the suggestion is from, from the research that we have done, is that the right financial conduct will almost automatically follow. Okay? So these are three kinds of self knowledge that we think are really important, uh, so as to live a happy, successful 100 year life. And it is something that would be a, would deal with the mental challenges associated with long-term financial planning.

Thomas Mathar (42:35): And I think it is somewhat something where, you know, advisers of the future, uh, would have a great opportunity to, you know, support, um, support their clients, uh, and support their clients' financial lives and financial wellbeing. So, key takeaways, I suppose, uh, you know, overall our retirement as we, as we know it, and as it has been institutionalized and normalized, what, a hundred years ago, from a hundred years ago, you know, that will cease to exist. It won't be that sort of final stage, um, of a three stage life. It will mean different things to different people. Um, the, the, the multi multi-stage life means long-term saving also isn't just about retirement planning, it is also about the ability to fund transition points, um, in that, that that happen in between. Yeah. Um, to, you know, to my point, long-term, saving retirement planning isn't first and foremost a financial challenge.

Thomas Mathar (43:32): It is first and foremost a mental challenge, which is why I believe financial advisers of the future. In addition to the functional and technical, uh, financial skills and knowledge, they also have more human-centric skills out of psychology and behavioral science, perhaps neuroscience, perhaps anthropology, et cetera. Um, so as to help clients more holistically, okay? Appreciating how the brain works. And the, and, and one of the things that I believe are, um, is so important for financial planners, uh, is that ability to develop self-knowledge on the clients, yeah. On the client side. And as I said, this is self-knowledge about instincts, biases, perhaps habits, um, context factors that impede progress, okay? Uh, but also self-knowledge about the things that make them happy. Self-knowledge about the things of, you know, the activities and experiences, et cetera, of their future self, have that concrete and vivid, uh, meaningful connection, um, to their client's, uh, yeah, future selves, hopes and fears. Okay. and support along the way. So that is, me I think bang on time.

Steven Cameron (44:45): Perhaps there are a couple of questions, but apologies for running over a little bit. If there are any more questions, if you want to find out more about the material that we talked about here, you can scan this QR code here and find more material. But I'm also happy to stay on and answer any questions if there are any.

Steven Cameron (45:12): Thanks, Tom. Yeah, there have been a few questions that have come in. But as you say, we're running a bit, late on time. There's one question that I thought might be relevant to both of us, and it's asking about whether, our work on the Second 50 and also in mentally preparing for the hundred year life are relevant to younger generations. So, I'll give some thoughts on Second 50 and I'll pass on to you. So absolutely and in fact, I remember when we were, drafting the Second 50 report, Tom, you said, hang on a minute, looks like it's all for over 50 folk. And I said, oh, right. We didn't mean it to, to be. So very much we think this is relevant to younger ages as well, quite clearly. If you understand what the financial implications, the wealth fundamental will look like in later life, it can help you start, prepare for that.

Steven Cameron (46:02): I might encourage you to put a little bit more aside today, for tomorrow, the health one, again, some of the decisions you make about living a healthy lifestyle at younger ages can have a big bearing on when you, when you move into your Second 50. And I think the other thing that the wellbeing, the whole wellbeing aspect, you know, realizing that what makes you happy now will be different from what makes you happy, uh, in later life. Again, it's worth thinking about so that you, you have no regrets. I've heard, um, one advisor talk about helping people understand the consequences and if they can afford the consequences of actions are taken today, bearing in mind the consequences of those actions in, in, in later life. So, absolutely, um, if it comes over as if we've been talking about this solely for the over 50 population, that wasn't our intention. I don't know if you got anything to add, Tom?

Thomas Mathar (46:53): No, no, that's great. Um, I mean, I would say perhaps as a rule of thumb, um, for the young generation, it is, I would say it is the case that it is that long-term financial planning isn't just retirement planning. And retirement planning is important. That will play a role, it will be a reason, excuse me, for why, uh, younger people will seek the services of a financial adviser, but the ability to, to fund transition points is almost equally important. Yeah. So to have, funds for, you know, re-education for perhaps periods of unemployment, for, you know, perhaps sabbaticals for like, for all sorts of, other things, and, and product wise, perhaps that highlights the importance of ISAs, rather than just pensions. Uh, but I, but, but I think this is something, as a rule of thumb, as I say, you know, I, I, I, yeah, I would, I would consider the, the younger generation are interested in retirement planning, but not as much.

Steven Cameron (47:57): Thank you very much, Tom. I think we've held people back a few minutes over their allocated time. Thank you very much for joining. Other questions we will try to follow up individually. You can access a recording of the session. I'm hoping that the, CPD certificate has been posted in the chat, in the, the q and A section. Um, I'm

Thomas Mathar (48:20): Sure. Yes, I can see it. Yeah, I can see it in the q and a.

Steven Cameron (48:24): Yeah. Okay. So I think all that it is left to be said is many thanks for joining us, and if you're interested in this, we hope that we'll be in touch with you again in the future.

Test your knowledge

Once you’ve watched the webinar, enter your name and correctly answer the questions below to generate your CPD certificate. 

Question 1: What was the top retirement aspiration identified in our Second 50 research?
Question 2: What was the top later life concern identified in our Second 50 research?
Question 3: What percentage of people stated they’d rather have an adviser focused on ‘helping them make better long-term financial decisions in line with what makes them happy’?

Continuous Professional Development


Certificate of completion

Completed on:

CPD credit: 45 CPD mins

The User

Preparing your clients for a 100-year life webinar

  • Completed on: 20 July 2023
  • CPD credit: 45 CPD mins

CPD Learning covered

  • Understand the shifting retirement landscape – as we move from a traditional three stage life to a multi-stage life and the fundamentals to help your clients. ​
  • Delve into the future self and how understanding what makes us happy can help frame our goals and objectives. ​
  • Explore the move from a performance maximiser to a wellbeing maximiser and the role you can play to help mentally prepare your clients for a 100-year life. ​

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