Webinar Retirement: more than a maths problem

(00:04) Hello. Good morning. Thank you so much for joining this session as part of Money Mindshift Week. I'm Tom, I'm Head of Money Mindshift. I tell you a little bit about what we are up to today in specific in the session with Dan, but also at Money Mindshift in general. Said this is called Money Mindshift. Perhaps you're aware of the phrase money mindset. And money mindset of course, that suggests that the way we think, feel, behave around money is sort of set. We call this money mindshift to say and to suggest that the way we think, feel, behave around money can be shifted. And the way it ought to be shifted is, that money is to be seen as a tool to live the life that you want to live, right? It's never about earning money for the sake of money, spending, investing, saving, protecting, et cetera, for the sake of the money, but to use it as a tool to live the life that you want to live.

(00:59) And we believe that advisers play a real important role in helping their clients achieve this, achieve this vision of money and this vision of life. And that's why in Money Mindshift Week. This week we bring this to life with a few different angles. Yesterday we had a session on the psychology of financial advice. Tomorrow we have a session with James Woodfall, who is an ex-financial planner, who looks into the emotional intelligence skills necessary for financial advisers to succeed long-term, build relationships, build trust and what this means at different points in the client adviser encounter. And today, I'm so thrilled, to be joined by a true friend. I think of Money Mindshift, which is Dan Haylett. We've done a number of these sessions together, live on stage for employers before. Dan has also been a guest on the Money Mindshift podcast and one of the earliest episodes that was called How to Spend.

(02:05) So really thrilled to have him again today when we look at retirement planning and retirement planning beyond the maths and the technical planning. For those of you who don't know, Dan is a financial planner himself, but he is more recently very become very popular and successful with the work that he's pushed through his podcast called The Humans Versus Retirement Podcast. And in this already, you see a bit the tension that he's so interested in exploring when the name already suggests there's something unhuman inhuman in the way we think about retirement. And then more recently as well, he has published his book called the Retirement You Didn't See Coming, which is a tremendous piece of work. I can highly recommend. Dan, thank you so much for joining. Great to have you. I hope you're well,

(03:00) Tom. Thank you. Yeah, all good. Thank you very much. Thanks for having me along. I can't wait for the conversation.

(03:07) Fantastic. What I will say before we get started is there's a q and a section here that you see above our faces. I'm really happy to take questions along the way. If there are no questions along the way we have a bit of time towards the end to enter a bit of debate with Dan. But for the time being, we just kick off. I ask some questions and you feel free to chip in. So here's my first question then Dan, and perhaps to set the scene a little bit. And, and frame this for those advisers who don't know you and your work yet who are you, what does your practice actually look like, and how did you end up specialising in this human side of retirement rather than the technical side?

(03:59) Yeah, I'll keep it brief because I'm sure people wanna get into the meaty stuff. But I'm a director of a regulated financial planning business, chartered financial planning business called TFP Financial Planning. And we work exclusively with people in retirement that kind of, 50 to 62/63 group where successful people that have diligently saved, they're approaching their decisions around the second half of their life. So we exclusively work with people in that group and focus on the human, emotional, psychological, behavioral, and financial elements of retirement and how they all kind of interact and interwind and and compete and compliment each other, which I'm sure we'll get into. And as you said off the back of that, I've built a kind of a pretty rapidly growing brand around humans versus retirement, which, as you said, kind of started with the podcast.

(05:07) I've got a YouTube channel, which is delving into it, but more a newsletter. And I talk about this stuff and write about this stuff kind of really a lot now. And it's that kind of platform. And the business, the practice and the work we do one-on-one with clients is, is built around kind of one central idea, really, that retirement is primarily a human problem, a human challenge, not a financial one. And how the public, the clients, and a lot of the financial industry has got it the wrong way round. So that's kind of where, that's where the premise of everything comes from and the work that I do.

(05:45) Right. And when we zoom into your practice, so when you actually meet clients and onboard clients and have discussions with them, you mentioned this distinction between financial planning and human planning. What does this look like in practice?

(06:04) Yeah, I think it's probably worth just jumping back a fraction. Because I think one of the reasons why we do the work that we do, and we've, , I suppose try to have a clear gap between the two or kind of focus on this life plan thing is because when I go back to how, when I first started almost a decade ago, those early interactions with clients were, and I've got a couple that stick right, right out in the memory where you have people that have done everything at least 60 to 62 with more money than they necessarily need. The spreadsheet looks wonderful, the cashflow looks amazing, you can stress test it, and Monte Carlo it to your heart's content and everything looks fine. And then you meet them in six months time, and they kind of say things, and these are kind of real words, or they stuck with me a lot.

(07:02) Like, Dan, I think I've made a terrible mistake, like, not financially, but they had no idea who they were anymore. No structure, no purpose, no identity. Their relationship as a couple was really challenged. You could see them, they weren't particularly happy with one another. And I think the distinction there for me then goes, well, I've done the maths bit correctly. But yet they are, they're not living the life thing. And I remember sitting there thinking, I built him a brilliant financial plan, but I've completely failed them both to help them build a brilliant retirement. And that gap between those two things. That's kind of what I've obsessed about. Because I think if we're being honest, the financial part of retirement planning is the bit that we are actually good at.

(07:44) And it's actually pretty easy, right? I mean, let's be honest there's some technicality around it, but the hard part, the human part is where I think clients and ourselves are largely winging it. So if I think about what traditional financial planning starts with the money and works outward, how much have you got? How do we grow it, protect it, spend it, pass it on all important questions, but they are the wrong starting point. In fact, they're the probably wrong middle point as well. And I think a lot of people jump to that, clients jump to it. We jump to it pretty quickly. But if I think about what life planning or financial life planning, it starts with the life and work backwards, right? Works backwards. So what does a rich and fulfilling retirement look like for you?

(08:33) What do you want it to do crucially? I think the definition for me is feelings. So I asked the question, how do you feel? What does it feel like? How do you want it to feel, going forward? And I think that then becomes about experiences and memories and, , human emotion and, and how do we use the money as a tool to make all of that possible? The distinction I think sounds a little bit subtle, but in practice it's gigantic, right? It's enormous. Because when you start with that life conversation, the conversations are very different. The questions are different. Crucially, the plans are different. They mean something very different to the client. They're not just signing off on cashflow. They're committing to, I suppose, a vision of their future. And I think the risk of the traditional approach is a lot of that gets commoditized by the wonderful two letter phrase of AI over the next three to five years. And I think when we think about the traditional approach, we can think about that technically perfect financial plan that we build. For a life the client doesn't actually want, or they can't envisage that they can have. And I think life planning forces us and forces the client to really examine that. And I think that's where the real value, real value sits.

(10:01) Can I invite you just to elaborate a little bit on this life planning phrase? Or, because you contrasted to your financial planning and life planning, financial life planning, just for those who aren't aware, because that's a real movement now, isn't it, within financial advice? Yeah.

(10:18) Yeah. I mean and I've kind of answered the question as a kind of a versus question. But actually I think if my true belief is that there's only one way to deliver this, right? So I don't think it's a financial life planner versus traditional financial planning. I think there is, particularly in retirement, there is only one way to deliver retirement planning to clients to enable them to live their best second half of life. And that is however we wanna define it. There's so many different human first, life first, life pla- and I think we get caught up and it confuses the hell out of the public about what we do. But I do think there is one way to deliver this, and it is a human led life first, emotionally intelligent and aware financial life plan. However, we kind of want to define that.

(11:21) Okay. Okay. And then zooming in again, on a very practical level, what would you say you typically don't hear? What is not being discussed in retirement planning that is so essential?

(11:37) Yeah. And again, this comes from real world stuff. I mean, I've been fortunate enough to work with a lot of people over the last 10 years or so, and a number of them have come from other financial advisers where they don't feel like they're getting maybe what they wanted. And so the kind of the lens I'm looking through is here, what did they have and why have they moved, right? Why have they moved? And they've heard me talk about this stuff on YouTube and podcast, and they've obviously come to me for a reason or come to us for a reason. And the things that I talk to them about that they say they haven't talked to other people about are kind of these questions around, what are you doing on a Tuesday morning at 11?

(12:24) You wouldn't hear a conversation necessarily about identity, about what the person is retiring to rather than from I don't think people necessarily hear conversations that explore how the client's marriages and relationships are about to fundamentally be stress tested. You wouldn't hear conversations necessarily about purpose or about the fact that for most people, work has been quietly answering the question, what am I for the last three, four decades? And I don't think any of that happens because the people, advisers don't care. I just think it happens 'cause we're never trained for it or confident in asking those questions. And I, and the whole profession is really built around solving the financial problem. And as I said, the financial problem, honestly, is probably it's an easier one to do. The harder problem is helping someone figure out who they are and what they want, their career, who they are and what they wanna be when their kind of career scaffolding falls down from them.

(13:22) And I think my instinct is through real lived work with clients and hearing this a lot out in the public domain, and I'm fortunate enough now that the YouTube channel is giving me hundreds, literally hundreds and hundreds and hundreds and thousands of comments from people that are kind of commenting on the video. So this is coming from a place of knowing most clients are walking into this transition completely unprepared for the human and emotional side of it. And I think, that's the big thing for me. So, I don't think these pre-retirement conversations are focusing on, and I think we're gonna get onto this, around these kind of, purpose and identity and structure and wellbeing and relationships. The things that actually make or break a retirement, right? People that have diligently saved and got to a point where the pot of money has some ability to get them to be financially free.

(14:16) I think a a lot of people then go, well that bit feels okay. There's behavioural bits around the money, which I'm sure we'll get into. But the thing that makes or breaks it is what's gonna make me pull back the duvet in the morning? Who am I without the job title? Figuring out how my relationships are gonna change and what I need to do to build them. That's the thing that really makes people kind of have a wonderful retirement and come back with plans for next year and the year after. And, and I don't think we're... I think we touch on them a little little bit. We call it a discovery meeting. We call it a life planning meeting, and then we get into the numbers really quickly. And I think more time, more weight, more understanding needs to be in that space there.

(15:04) So many things to pull on here. And beautiful choice of words that we are clear what we are retiring from, but we are not necessarily clear what we are retiring to. I want to come back to what you said, purpose, identity, meaning relationships some of those things. But to stick with the money side for a bit I know you've done a lot of work on the skill of spending money and that the fact that under saving that gets enormous attention. But you've argued that the underspending problem where, where people have saved a lot of money but can't bring themselves to spend is actually equally damaging and less frequently discussed. How do you unlock that to help a client to start spending spending money?

(16:01) I mean, I kind of wanna say that I know there is issues around people under saving, right? I get that. But I don't work in that area, right? I, I specialise in an area where people have, have diligently saved a pot of money. And to get to a point where they feel like they can have a conversation or let it get into their thoughts, that there's an ability for them to step back from full-time work, right? That's kind of where they're at. Now, that part of money can be different for everybody about what that might look like. But I think what we have to understand is that process of saving money for multiple decades is a process that has wired in a set of beliefs and behaviours to a client that are then feeling like, or being asked to kind of rewire that within a week.

(17:04) And you think about all of the things that have gone behind that, the sacrifice, the security, the building up, the wiring and the behaviours around save, save, save. And the number doesn't quite make sense and keep pushing for another one and another one. And the seeing that number go up, which obviously it's done over a period of time, whether through markets and or savings rates, to then be asked to feel like you're going to kind of knock down the sandcastle purposely and have fun that you've built, have fun, knocking it down that you've spent 40 years building is a real psychological shift. And so the first thing I try and do is name the problem, right? Because most clients who can't spend don't know that they can't spend, they just think they're being sensible and careful and responsible because they've spent decades being absolutely brilliant at not touching the money.

(18:01) And now we're asking them to reverse everything that they've ever learned about how to behave with it. Right? That's not a financial challenge. It is far from a financial challenge. It's a deeply human psychological one. And so I think naming the problem, speaking about it, giving them permission, which I'm sure we get onto in a bit, 'cause I think it's a big word. To have that conversation, I think is so important to name the research behind it, to say that this is an issue, to give them understanding that it's not a them problem. It's both a inbuilt human issue that we've had for thousands of years. 'cause our brains are still wide to store the grain just in case winter's coming. Right? So survive first, thrive second. And then we add on top the layers of learnt behaviours and everything we've done over a career.

(18:57) We need to help people unwind some of those, and I think we need to build what I call the skill of spending, as you said. We’ve been taught to save, we understand why we’re saving. I don’t think we’ve necessarily been taught to spend, and I think a lot of people go into retirement and don’t know exactly why they’re spending. That comes back to what we talked about before, when you think about what people are retiring from and to. If everything they talk about is what they’re stopping, not starting, or they’re saying, “I can’t wait to get out,” or “I’m done with the commute,” or “I just want to be free of it all,” then it becomes a move away from something.

(19:42) And if they’re not running towards something, if they’re not being pulled towards something, then people don’t know what they’re going to spend their money and their time on. And there’s a massive challenge in that – to be able to help people build the skill of spending their money intentionally, properly, on what they want. We need to talk about what they’re retiring to, who they want to spend their time with, and what it means to get out of bed in the morning, all of those things we’ll get onto. So yeah, I think that’s that.

(20:11) Dan, this is so good, and I’m sure it’s so helpful to many advisers here in the room. Can you just give a couple of examples of what this sounds like in practice? When you bring this subject up, when you tell them there’s a problem they’re not aware of, that there’s a problem and we’ve got a name for it. What does this sound like in practice when you’re sitting with clients?

(20:34) Yeah, I think the conversation is not necessarily about trying to make people spend money. So I’ll tell you what it is, but I’ll also explain what it isn’t and some of the bad stuff first. Because what I’ve seen before, when I’ve started working with people who have had advisers, is that the default option seems to be to show them more numbers. To give them more proof from a numbers point of view, to show them they’re never going to run out of money, and then make them feel judged or guilty that they’re not spending it. Like, “Why are you not spending your money? You’ve got loads. You’re going to leave a lot of money on the table.” That does not help anybody. It doesn’t help anybody.

(21:21) And in fact, it will have the opposite effect, is what I’ve found with people. So I don’t think we should try to make people turn into spenders quickly. It isn’t about turning a lifetime of careful saving into a spending spree. I think that would terrify most people. But we do need to shift the framework. I need to understand that spending feels like loss. We’ve talked about loss aversion before, and I know many people on the call have probably read about it, the fact that loss hurts twice as much as gains give us pleasure. I talk about this with clients, and I’m honest with them. I say, that £10,000 you’re going to draw out of your pension to pay for a holiday with your grandchildren, just know that the feeling of losing the £10,000 will hurt you twice as much as the pleasure of going on holiday with them.

(22:19) Like, that is just a built-in thing that we know happens. It doesn’t mean you’re not going to enjoy it, but we need to understand that loss hurts more than gain. So the number goes down and something in them flinches. What we need to do is reframe that, and I call it front-loading the fun. So, what do you want to do in the next 10 to 12 to 15 years that, when you get 15 years down the line, you might not be able to do? What does that look like? And I think those kinds of frameworks, that framing, when you speak with people, means that you need to understand who they are as a person. Are they anxious? Are they guilty? Do they avoid this stuff?

(23:02) But give them a reality check around what it means for them, without showing them more numbers. Have more conversations about who they want to spend their money and time with, and what’s most important to them. And sit there without any cash flow or visuals. Because what tends to happen is they’ll say, “I want to spend X amount on that.” Someone will type that in, and there’ll be some red in the plan at 99. It will show them running out of liquid money at age 98 or 99. And guess where their head goes? It goes to the red, to the danger. So we need to make sure that we’re bringing energy into that conversation. You’re front-loading the fun. You’re spending your money with intention on things that you really want to do, that create memories and experiences. That’s the language I use. What do you want to spend your money on to create memories and experiences that last your lifetime and your family’s lifetime? And it doesn’t have any financial ramifications, unless they turn around and say, “I want to spend £100,000,” and deep down it’s going to put their financial plan in jeopardy. Then you can bring it back to some of those conversations.

(24:14) That paves the way quite nicely for that key word, permission. I want to come on to this now, but very quickly, because you mentioned loss aversion and some of those instincts, I just want to quickly plug that in the session I did here yesterday, within Money Mindshift Week, when I looked into the psychology of financial advice, I went in depth into things like loss aversion, action bias, present bias, and so on. So if you’re not aware of those principles and biases that Dan just referenced, go back and check out the session I did yesterday. Now onto the P word, Dan. Permission.

(24:54) I think if there’s one word that has come up the most in client conversations, and in the emails and feedback I get from the content I produce, it’s that word: permission. The conversations are often around giving themselves permission to spend, or “I don’t feel like I have permission,” or “I need permission.” And I think what we need to understand, when we work with clients at this phase of life, is that the transition they’re making, or have made, is one of loss. Loss of purpose and identity, which I’ll come on to in a second. But also, they’ve almost been granted permission by external sources for decades. They’ve never really had to grant themselves full permission to do much when it comes to their financial life, or even how they live.

(25:56) So I look at this and think, if you’re working and you want to go on holiday, you get permission from your employer to have two weeks off, right? There’s permission granted. If you want to buy a new car, you might wait until you get your bonus, for instance. So there’s permission granted by the bonus for you to go and do that thing. For the first time, I think, in a long time, if not ever, the full power of granting ourselves permission to do things is on our shoulders. No one is going to come to us and grant that permission. And so it’s a real psychological challenge for people to grant themselves permission to spend their money and their time. And it sounds, when you explain this out loud, like this is where part of the problem comes in. People hear this and think, “I’m so lucky to be in this position.”

(26:51) I’ve had people say, “Why can’t I do this?” And they end up feeling more and more guilty about the fact that they can’t enjoy the freedom that they have. It becomes pressure. And so I think if we can do one thing, if we can help our clients grant themselves permission to go and enjoy and live their life, and use their money and time wisely, that’s the framework I would encourage everyone to look through. We can ask people questions like, “What would it take for you to feel like you’ve got permission to go and do this?” Because if we use that word, I’m telling you now, most people will be thinking it. They may not say it out loud, but they’re thinking it. So I think that’s the lens to look through, understanding that they’ve never really had to fully grant themselves permission, and now they’re going to have to. And that’s a real challenge. Because if you think about it, it comes back to the fear that you might have regret if you make the wrong decisions.

(27:52) And that’s all on you, right? That’s all on you now. So I think that’s where I would say there is a permission problem. There is a permission paradox that stops people from fully utilising their time, their money, and their health wisely. And it often comes too late, when they realise that they haven’t been writing themselves permission. So that gap, that window of opportunity, that’s when we need to help them write their permission slips.

(28:26) Yeah, perfect. Keep your questions coming. I didn’t see there was a question from Claire, but we’ve kind of answered it anyway, so thank you for posting that. You said, Claire, that cashflow planning shows the mathematical affordability, but it’s the psychological shift of giving themselves permission to spend that people find hard, and you asked for tips on how to overcome this. I think Dan has just addressed that point, so thank you very much. Keep your questions coming. I want to jump onto the slightly more technical side of this. I say slightly more because I know the technical solution is still very psychologically and behaviourally informed, and that’s bucketing. I know you have strong views and have done a lot of work on bucketing. This is all about splitting assets into time-based buckets. It’s a well-established solution in retirement planning, but it’s often presented as a technical solution, as I said. You seem to use it as a psychological tool. Can you describe what bucketing does, both technically as well as psychologically?

(29:35) Yeah, and I think actually we’ll answer Claire’s question in a bit more detail. How do we help give our clients permission to spend? Well, I do think a time-segmented, bucketed approach is effectively a permission slip for them. It’s more of a psychological tool than a technical one. It is technical as well, because bucketing really is a sequence of returns risk solution. Short-term income needs sit in cash for the next 12 to 24 months, so you’re never forced to liquidate growth assets during market downturns or volatility. Bucket two is what we describe as the lifestyle bucket. That’s medium-term, more of an all-weather, all-seasons type fund, with low volatility, where you feel that in most market conditions you’ll be able to rebalance from that.

(30:37) And then the long-term bucket is in as much equities as you can sensibly put it in - well-evidenced, diversified, and left alone to do its job. So there’s a technical element around helping with inflation and future purchasing power protection at that top end. You’ve got the income bucket for the next 12 to 24 months, so you’re not having to worry about that, and then lower-volatility, stable assets in the middle. So there is some technicality around sequence of returns and inflation, as I said. But the psychological function, and the permission function, is at least as, if not more, powerful. And I would argue that a lot of people aren’t using that to its full potential, or communicating it to its full potential.

(31:24) Because I think what the bucketing approach does emotionally is separate money I’m spending now from money I’m not touching yet. And that’s a distinction a lot of clients can actually hold in their heads. Because when markets fall by 20%—and they will—the client with everything in one pot looks at their statement and sees a fifth of their entire retirement wiped out, and they’re still having to spend. The client with a bucket structure looks at their cash bucket and thinks, “Well, I’ve got two years’ worth of income. The market can do whatever it wants, I’m not touching the other buckets.” And so the behaviour, and the sense of permission, is different. The more granular we can make the cash bucket, the more permission we’re granting them. So don’t just put 24 months of cash in there. Segment that cash as much as you possibly can.

(32:14) i.e. that bit's for your bills that bit's for the holiday, that bit's... So the labelling, this kind of mental accounting effect that’s out there, where you can mentally account for the money and it’s there for certain purposes, means the decisions are different. The panic is different, the emotional reaction is different. And I think I’d go a step further as well. I think the naming of the buckets matters enormously. You don’t call them bucket one, two, and three. I think you either give them names that fit your approach, or give them real names that connect the client’s life to their funds and what they’re building. This is our life fund, this is our adventure fund, this is our legacy fund.

(33:00) Use their language in this, because that then creates a much more powerful investment and income strategy. And I think, just one thing on top of that, I am a big fan of guaranteed income. I’ll say this, and it might be a bit controversial—I’m a massive fan of guaranteed income, and I couldn’t care what the annuity rate is like. I think for so long we’ve focused on annuities being poor value because the rate is poor. But I’m telling you now, if you dig into the research by my good friends David Blanchett, Wade Pfau, and Michael Finke over in the States, they talk about the licence to spend money. People find it so much easier to spend money from income than they do from capital. And in fact, the research those guys have done suggests that, on average, people with a baseline guaranteed income that covers their basic expenditure spend almost twice as much over a 30-year period than people with none.

(34:10) And that’s because you’ve taken away so many problems. You’ve given them permission to use a pot of money for discretionary spending without having to worry about the longevity of that pot. Now, I know there are technical questions, and maybe there are value equations to consider here, but ultimately a guaranteed level of income, much like a bucketing strategy, is far more behaviourally impactful than it is financially impactful. And so I think if you add guaranteed income into your bucketing strategy, alongside the time segmentation, you’re creating something that gives clients permission to spend their money on what’s most important to them while they can, and takes care of things throughout their retirement.

(34:53) Is there a rule of thumb you would apply? Is there some kind of mix between annuities and bucketing? I guess guaranteed income like the state pension or DB pensions are probably out of the equation. But is there a guideline—something like 70/30, for example? Seventy percent in bucketing, 30 percent in annuity—something like that?

(35:14) Yeah, I wouldn’t say there’s a fixed rule of thumb, but I do think there’s a rule of thumb to have the conversation with everybody. One of the more popular videos I’ve done talks about a blended approach. So, where you have guaranteed income alongside bucketing strategies. I think you talk to people about what they feel they want to guarantee for life. And the annuity market has evolved nicely. It’s not just one product anymore. There are different options, like secure lifetime income and other fixed-rate solutions. So you don’t have to commit to a full lifetime of guaranteed income. You can, for example, bridge the gap between retiring at 60 and receiving the state pension at 67, or increase the level at some point in the future.

(36:03) So this is about understanding those retirement income “catch-up” periods. If you’ve got no guaranteed income coming in and you retire at 60, and you’ve got seven years to wait, how can you fill some of that gap until you hit the state pension? If there are two of you, how much of your basic expenditure does that then cover, and how much would you want to fill? It’s about having those conversations with people and understanding what they feel comfortable with. There’s also more and more work being done on what I call people’s spending DNA, their profile around what kind of spender they are. And again, there’s some great work in the States on retirement income profiling. Are you very risk averse? I think that kind of work really helps unlock what people want and what feels right for them.

(36:53) So, interesting. I would say that if you can, you’d want to fill as much of the true basic expenditure—heating and eating, that kind of thing—as possible with guaranteed income, so they know that’s covered. Then figure out those “catch-up” periods where there’s no guaranteed income, followed by some coming in, and fill those gaps. From there, you can talk to clients about what the buckets are truly for. You’ve covered the essentials, you’ve done that. Now you can allocate the rest to what I’d call basic-plus, leisure, discretionary, and luxury spending.

(37:31) I wanna come back to bucketing but to bring in some questions from viewers as well. Very quick before I get there, just one very quick question, hopefully you mentioned the different spender profiles. Is there a quick reference you can drop for those who are wanting to follow this up? In terms of what? Where to go to find out their client's spender profile?

(38:00) Yeah. Do you know what? There's not <laugh>. I would look at the profiling work in the States by Wade Pfau, which is really good, and the sort of material you can look at and maybe apply. I also know the guys at Oxford Risk are doing a lot of work on spending profiles at the moment. But ultimately, one thing I’ve done is build a really interesting piece of kit using AI to look at people’s spending profiles. I’ve put a lot of work into it, based on all the research I’ve done. And you can build this yourself, thinking about what it looks like in terms of the profiles. I think typically you have four profiles of people, and at one end you have those who are fully risk averse, where you should be talking about annuities a lot.

(38:48) You have the people who have taken risks all their life and don’t see the value in giving up the pot. So you have those at one end, and then you have the middle ground, where you’ve got hybrids—those leaning more towards guaranteed income, and those leaning more towards risk or bucketing strategies. Like anything, the extremes don’t exist as much. What you tend to find is that most people sit somewhere in between. And as you said, it’s about understanding that and showing people. This is also a body language thing. When you’re sitting with clients and running through these scenarios, you can tell when something lands. You can see it in their eyes and how they interact with each other as a couple. At first, they might be closed off, and then suddenly they open up. You can see those moments shift. And it absolutely happens when they start to feel empowered. They feel that sense of agency, that they can take control of their money and spend freely. And that’s the point where you figure out what that blend should look like.

(39:51) Yeah. Okay. Great. But again, so much in there, I wanna bring in some of the listener questions or viewer questions. Now we have one question here. It says, I think people find it difficult to accept that we all die that time is such a precious commodity as we age, but strangely, we can't stop the urge to keep accumulating. How do you bring this aspect of our mortality into your conversations?

(40:16) Yeah, I love that. If there’s one area I talk a lot about with clients that they maybe wouldn’t expect a financial planner to cover, it’s their health span and their lifespan. I think it’s really important to have those conversations. As human beings, we’re pretty bad at talking about death. Some people are better at it. I’m not very good at talking about it myself. But understanding our mortality matters. If we all knew the day we were going to die, none of us would be here, right? It would just be a simple maths equation. But I talk about health span versus lifespan, and the data is out there. You can get it, and I present it to clients. There’s data from the ONS, the World Health Organization, the IFS, and other studies. The reality is that our health span hasn’t really moved that much in the last 50 years. What we’ve become very good at in the UK, the US, and other Western countries like Canada and Australia is keeping people alive towards the end of their lives. And that creates a different set of planning challenges, thoughts, and processes.

(41:42) But ultimately, we need to help people understand that their life moves in three phases. We’ve all heard about the go-go, slow-go, and no-go years. I call them the exploring, nesting, and reflecting years, and I use those phrases with clients. Our health span declines, and it’s not just a mortality question. It is, in part, but it’s really about the fact that as we age, our bodies and minds change. The want, the desire, the need, and our ability to do things gradually reduces. So I build financial plans grounded in real data that reflect health span, lifespan, and spending patterns. And I talk to clients about this. I ask questions like, if you understand that your health will naturally decline over the next 10 years, what are the things you would like to do now, while time, health, and money are most aligned?

(42:57) Yeah. And I talk about those big three a lot with people. Time, health, and money. When you’re in your fifties to mid-sixties, those are probably as aligned as they will ever be. So how do you take advantage of that? I think that’s the work we need to bring into this. Not hearsay, and not just a cashflow plan with 5% investment returns, 2% cash, and 3% inflation because it’s robust and repeatable. That’s fine, but there’s real-world data out there that we can show people. We can say, this is the kind of trajectory, and you can scenario plan from that and show them why it matters. You’ve got 12 to 15 good years when you hit 60 to be able to spend your money. And one of the reasons people don’t spend is because they don’t spend enough during that period. Then in their mid-seventies they become accumulators again, and they’ve got another 15 to 20 years of spending less than their investments return. And they end up with multi-millions still in the bank. That’s a problem we need to fix—and one that we can fix.

(44:00) Yeah. David is asking, on the topic of permission, are you conscious of your own potential bias in these conversations? I.e. how do you stop projecting your own version of what an enjoyable retirement should look like for your clients? <Laugh>? I mean, perhaps the immediate question, that follow up question that comes to mind, have you taken your own spender profile test <laugh>? Do you know it as far as like me theory in this?

(44:27) Yeah, I think it’s a great question, and I’m absolutely aware of that. I’m talking now in a more theoretical sense, but when you’re having conversations with clients, you cannot project your own views onto them. They are who they are. They’ve got their own internal wiring. They are uniquely themselves, and they’re very different from us. So you have to be aware of what they’re thinking, and careful not to push your own views. One example is understanding that there’s a value exchange in spending money. If you’re working with someone who can absolutely turn left on a plane every time they travel, but somewhere along the line you realise they don’t see the value in that, then it’s counterproductive to keep pushing it.

(45:37) Yeah, because if I was you, I’d love to turn left and fly business class and first class all the time. But spending money on something you don’t value has a really negative effect. You shouldn’t spend it at all. So that’s why the conversations are so important. They’re coaching conversations. This isn’t about telling people what to do. It’s about drawing out what they value and what’s important to them. But I also wouldn’t be afraid to give your opinion. A lot of clients, and a lot of people I work with, want to hear it. I just caveat it. I’ll say, “If I were you, I might think about it like this—but I’m not you. How do you feel about that?” And I think that’s important. They’re there because they want a conversation. They’re doing this once in their life, and they understand that we’ve done it many times with many people. They may not have a mentor or someone to guide them, so they want to hear an informed view. So don’t be afraid to share your perspective—but don’t impose it. Their financial plan, their life plan, their retirement—that’s theirs, not ours. And we always need to look at it through that lens.

(46:55) Yeah, the way you discussed that—people seeking your views—brought something to mind that I’m seeing more often recently. And that’s the power of experimenting. People aren’t always certain. They ask for different views, and rather than planning everything out, they just want to try something. What does it feel like if we do this for a bit? There’s no failing or succeeding—it’s just an experiment. Anyway, I want to bring in more questions here, or perhaps comments. Adam says that this works best with £1 million clients, and that’s where the real issue lies. With around 30,000 qualified advisers, the majority of people who truly need time and advice for this incredibly important transition are, in the main, excluded from guidance and real advice. When working with million-plus clients, it’s much easier to focus on and spend time on mindset. As we all know, if you’re a regulated individual, the advice itself doesn’t really change regardless of the size of assets—there are just more options and elements. Perhaps more of a comment than a question—but is there anything you’d want to add before I bring more in?

(48:16) I've come to realise that my best work is done with people that have diligently saved a pot of money that approaches that figure, because they have the question of they've led a lifestyle, they want to lead a lifestyle, they want to use their money for good, and there's enough jeopardy in that number. That means that they need help and guidance along the way, right? I don't work with, I mean, my financial planning business is completely fixed fee in everything we do. So I don't care how much money you've got, our fee is our fee for the service that we provide, independent of the money that you have. I just know where I do my best work for people. Right. So I think that we want to try and help people.

(49:09) One thing I will say—and this might be a bit controversial—is that we need to be careful about where we’re betting our long-term business and who we choose to work with. Because there will be solutions coming through that will serve what we might call those clients for next to nothing. I’m telling you now, I’ve seen what’s happening in the States, and I’ve seen what’s starting to come over here. For £59 or £99 a month, people can get pretty much everything they need. If you’ve got a sub-£500,000 pot, they might just need a one-off check, a bit of an MOT, a second pair of eyes. I do think where we, as regulated professionals, really add value is with people who have more complexity in their lives. That’s not always directly correlated with the amount of money they have, but there is often a link, if that makes sense. So yes, people need help, and I think we can help them. But how we help, and how we charge for that help, is a much bigger debate—one that’s been going on for years.

(50:12) And I will just plug here that, because you were kind of like hinting at this, you've written a much debated piece posted on LinkedIn called the Empathy Gap, where you speak about AI and the challenge that AI... It's actually called the empathy delusion, which is a bit more punchy.<Laugh>.

(50:37) Well done. Okay, great. So where was I, sorry. We have here Rachel saying annuities to cover essential expenditure allows clients to spend more of their discretionary assets, they have a happier retirement, knowing that the essential costs are covered. We spoke about this, and I guess you'd say yes, depending on the spender profile.

(51:01) I mean, yes, depending on the spender profile, but I would absolutely introduce guaranteed income to every client you work with and show them the benefits, or not, and explain that to them. Independent of rates and all that, show them the research, talk them through it, and figure out whether it applies to them. Show them the benefits of this approach, particularly if you can stress test it and demonstrate that it creates better worst-case outcomes, which it generally does. You’re managing the downside much more effectively than you are maximising the upside. So I think that’s definitely something to do.

(51:43) We’ve got a great number of questions coming in, so I’ll let the viewers take over here. John Paul was sharing some really interesting comments and observations. He said the discussion appears to focus primarily on helping clients navigate the transition from working life into retirement. Do you also explore aspects such as physical wellbeing and intellectual engagement? And if so, how do you incorporate these into the financial planning process? That paves the way quite nicely for the five different pillars John Paul goes on to mention. In his experience, those who seem to gain the most fulfilment from retirement are individuals who remain active, maintain strong social connections, and continue to seek intellectual stimulation. This often leads them to return to some form of work or voluntary activity—not out of financial necessity, but because they enjoy the sense of purpose, challenge, and achievement it provides. That sounds like you’re very aligned.

(52:35) Yeah, I’ve written before about why working could actually be one of the best things you do in retirement. And again, each to their own. But here’s what we need to understand—and I’ve written about this quite a bit. I talk about the five pillars of a thriving retirement, and I think you could absolutely rename them as the five pillars of a thriving life. Those five pillars are purpose, identity, relationships, structure, and wellbeing. They underpin a thriving retirement, and arguably a thriving life more broadly. Now, if you think about when people take a hard-stop retirement—so on the Friday they’re working, and on the Monday they’re not, which isn’t always how it happens, but just imagine that transition—work has provided, whether you like it or not, and whether you complain about it or not, a lot of those pillars. It has, to a greater or lesser degree, given you purpose, identity, relationships, structure to your time, and part of your overall wellbeing.

(53:49) And you lose that, right? So I’ve talked a lot about retirement being a period of loss and grief. And actually, the emotional journey I’ve seen people go through often mirrors the Kübler-Ross change curve, where they experience those ups and downs as they adjust to what’s happening. But if you think about it like that, these are five elements that can make or break someone’s retirement, and none of them are really money-orientated. And just to pick up on John Paul’s point around connection, social connections, and relationships, I get people to think about that deliberately. I’ve got a very abbreviated one-pager on the Harvard 85-year study, and I’d encourage everyone to go and look at that—not necessarily read the full study, because it’s huge.

(54:40) It's had four heads of the, of the department because they've died along the way 'cause it's been going on for so long. And Robert Waldinger is the head at the moment. He's wrote some really good stuff, a book called The Good Life. And, and ultimately that study has found that the number one predictor of a long and happy life, fortunately for everybody on this call, is not your diet or your gym habits. It's the quality of your relationships. If you've got great relationships, you are much more likely to live a long and happy life. And they also found that the number one retirement challenge for people was replacing the relationships that they lost from work when they stopped work. So that we know that information, so your relationships shift and they change. And, , there's no surprise that the UK's divorce rates in over sixties have shot through the roof over the last 10 to 15 years.

(55:43) I think the stat I saw recently was 9% of all divorces back in 1990, whereby people age over 60, it's something like 40% of all divorces now. And I think we're getting to a point where people are retiring and they're spending a couple of years in each other's company and realise that they haven't put the work in to understand the changing dynamic of their relationship. And they find out that too late work relationships had a timestamp on them. I think men are pretty crap at this, if I'm honest. It's your relationships are much more superficial than maybe relationships that women have with their friends. And we believe, and I've seen this before where I've worked with people, they retire and believe that their work relationships are gonna continue.

(56:30) It’s that thing where someone signs the card, says, “We’ll meet up for a beer once a month, can’t wait to see you in London,” and it never happens. Because everyone just gets on with their life. And all of a sudden, you’re sitting there two months later thinking, “I’ve not seen anyone.” They said they’d keep in touch, and no one has. So I think it’s so important to recognise this. When you step back and think about purpose and identity, working—or just doing something—where the primary reason isn’t financial can be one of the most liberating things you can do. If you’re in a position where money allows it, you can go and volunteer, mentor, give back, or even do paid work where the money isn’t the main driver.

(57:17) I do think that’s where the sweet spot is—the happiest people choose how they spend their time. They choose who they spend it with. They don’t put up with things they don’t want to put up with. And they spend their money and time on what matters to them. They have a reason to get out of bed that isn’t just breakfast. They replace their identity—not with a job title, but with what they do. They create new relationships. They build structure into their day. They’re not just drifting around the house for six or seven hours. And their wellbeing—both mental and physical, the engine that carries them through—is being maintained and worked on as they go on to live a healthy 20 to 30 years. So yeah, absolutely.

(58:08) This is such a wonderful conversation—again, so insightful. Dan, we’ve got about three more minutes, so I’ll have to wrap up, despite the fact that we still have more questions and comments coming in. I’ll just quickly plug the Money Mindshift podcast, which I host. Dan has been on it, speaking about the skill of spending in an episode called How to Spend. I’ll also mention an episode with Christine Benz on How to Retire, and we’ve got another one coming up in two weeks called How to Retire Abroad. And I’ll now publicly ask, for the very first time, for someone to come back on the podcast—and that’s you, Dan. I’d love to have you back for an episode called How to Retire Early, because I think that’s an area where there’s a lot of fantasy around why it would be so great, but also a lot people haven’t really thought through. So I’d love to have you back on the show for that.

(59:07) Absolutely. <laugh> amazing. Now in the, in the last two minutes or one minute that we have, I just want to pick up one thing very quick, and this is because you mentioned relationships and it's a financial planning question that speaks a little bit to the art of spending perhaps as well. So if relationships are so important, are there things you think advisers should give their clients permission to spend on, especially so as to advance relationships?

(59:40) Yeah, I would, and I’ve used these words—memories and experiences. We know that spending your money and your time on creating memories and experiences with people gives you the biggest return in terms of happiness. So I help clients do exactly that. One quick thing I do is what I call a “couple circle.” I draw a Venn diagram on a flip chart and get them to create three plans. I ask one of them to step up and write down what they want to do that they don’t think their partner or spouse wants to do, in one section.

(01:25) I then ask the partner or spouse to come up and write what they want to do that they don’t think the other person will want to do. And then, in the middle—the overlapping section—you figure out the things you want to do together. Because I think too many people assume retirement means doing everything together, and that’s often where it breaks down. It’s about honouring the fact that you can each do things you enjoy that your partner might not, and then being intentional about the things you choose to do together. That middle section is the crucial part. How do you create shared memories and experiences? And then the outer sections matter too—how do you create memories with friends, as well as independently?

(01:01:00) One of the big things for me is golf. I love playing, and I go and play great courses with good friends. We go on trips together, and then we talk about those trips afterwards. And that’s the point—you’re creating memories and experiences. Bill Perkins talks about “memory dividends,” and I think that’s exactly the idea we need to bring into these conversations. How are you spending your money to create memories and experiences, both now and in the future? That’s the language I would encourage everyone to start using with their clients.

(01:01:30) Wonderful. This has been absolutely amazing—so many Money Mindshift moments that speak directly to the mission I outlined at the start. Dan, thank you so much for sharing your wisdom and your time. This has been tremendous. And for those who want more like this, as I mentioned earlier, there’s one more session in Money Mindshift Week tomorrow. I’ll be speaking with James Woodall, a former financial planner who now runs his own training business focused on emotional intelligence for advisers. That session is tomorrow. I hope to see you there. I hope this has been useful for you. Dan, thank you again so much. And thank you to everyone for joining, for your questions, and for your comments. This has been great. Thank you very much.