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Financial advice for Fred

Created:
8 May 2008
Written by:
Moira O'Neill

Are you a Fred? If you're approaching retirement and are worried about your finances, this is your new moniker: Facing Retirement Earnings Doubts. The 'anxious majority' of Freds equates to a staggering 6.5m people according to new research.

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The LV= 'State of Retirement' report reveals that people approaching retirement are aware that there is a significant gap between the income they will need to maintain their standard of living in retirement, and what they will actually have. Those surveyed said that on average they would need £20,100 a year in retirement, but believed they would actually have an income of only £16,900 a year. The Freds are afraid of recession and rising interest rates eating into retirement income.

If you're a Fred, you're in need of some quality financial advice. A good financial adviser will be able to take a holistic approach to your finances. They will help you decide whether to go Skiing (Spending the kids' inheritance) and give guidance on how to get rid of the Kippers (Kids in parents' pockets eroding retirement savings) or stop being the Bank of Mum and Dad.

Mike Rogers, group chief executive of LV=, says: "Our advice to anyone approaching retirement is to seek professional financial advice to ensure you make the most of your finances when you retire."

Note the emphasis on the word "professional". People used to say "independent" was the badge of quality to look for in an adviser, but it seems that this is now not good enough. As you can become an "independent financial adviser" by passing some basic exams, anyone with complex needs or substantial assets needs to demand more from a potential adviser.

I took the basic qualifications back in 2004 - you had to answer some multiple choice questions and construct a not very challenging investment portfolio. I remember you earned points for getting the basic maths right and for understanding the difference between investing for income and growth. It was certainly more like a GCSE than an A-level.

Happily, the FSA is doing another shake up of financial advice and seems to be thinking along the right lines: independent financial advisers need higher qualifications.

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