Ian Browne, retirement planning expert at Quilter, comments: "Clients are now going to have a much lower capacity for loss as they are unlikely to earn significantly again in their lifetime, and will have no time to recoup or replenish their savings.
"This also may mean that they suffer a shortfall in their retirement income due to a future loss of contributions and/or a need to access their pension funds earlier than they had originally planned."
He advocates advisers sitting down with clients whose decumulation plans may have changed to assess their attitude to risk, capacity for loss and cash flow, to "provide them with a clearer idea of what they can expect going forward".
After all, he explains: "This change in personal circumstances and priorities for a client will be reflected in their asset choices in decumulation, as they will be more focused than before on preserving wealth."
But Browne also advocates people not making drastic changes to their strategies. He says: "Entering into retirement is an emotive time for anyone, let alone in the midst of a global pandemic.
"Advisers can help clients to stick to their retirement plan and avoid a knee-jerk reaction to withdraw their money at this crucial time and help ensure their pension funds last longer."
Ultimately, the advice would always be: seek financial advice; if your clients have not contacted you, send them a gentle reminder about their reviews.
Tom Selby, senior analyst at AJ Bell, comments: "Regular reviews are absolutely key in drawdown, and in particular after a big downturn such as we saw in March and April last year.
"Anyone taking big withdrawals from their capital at this time will be at risk of pound cost ravaging and may need to adjust their retirement income strategy to ensure it remains sustainable.”
As LV's Stevens says: "Financial advice is one of the best ways to secure your retirement. Make sure you are invested in the right mix of portfolios and ensure your drawdown rate is sustainable and your holistic financial situation is being considered.
"Consulting a financial adviser will give clients a clear plan of what they are aiming to achieve; visualising when they might want to stop working; and the budget that they need to live on to enjoy the sort of retirement they want."
Therefore, it is important to get the message out that good financial advice can help people get the decumulation strategy right, despite all the distractions caused by the pandemic.
simoney.kyriakou@ft.com
