Gerald Rehn: Retirees Have an Income Problem — and Advisers Need to Solve It

Why It Matters

Misjudged retirement income and looming tax reforms threaten client outcomes and expose advisory firms to compliance risk, making a strategic overhaul of retirement planning essential for competitiveness and regulatory alignment.

Key Takeaways

• 75% of advisers say clients misjudge retirement income needs
• 48% cite tax changes, especially inheritance tax, as top client concern
• Only 25% use open‑banking data for expenditure analysis
• 35% of advisers regularly recommend lifetime annuities in income mix
• 78% of firms adjusted practices due to Consumer Duty and FCA review

Pulse Analysis

Retirement planning is undergoing a fundamental shift as baby‑boomers move from accumulation to decumulation. BNY Investments’ latest research highlights that three‑quarters of advisers see clients underestimating the cash they will need, while nearly half are worried about imminent inheritance‑tax reforms slated for 2027. This mismatch creates a volatility gap: clients are exposed to market swings, policy changes, and emotional decision‑making without a robust framework. Advisors who fail to address these gaps risk client dissatisfaction and regulatory scrutiny under the UK Consumer Duty.

To close the gap, firms must embed systematic safeguards into the advisory process. First, a mandatory pause before clients liquidate pension pots can prevent knee‑jerk reactions to headline news. Second, leveraging open‑banking data to map real‑world spending—essential, lifestyle, and contingency—offers a granular view of income needs far beyond static questionnaires. Third, separating retirement‑risk from accumulation‑risk enables advisers to tailor income architectures that blend lifetime annuities, fixed‑term products, and smoothed‑fund strategies, aligning each component with specific cash‑flow objectives. Such a modular approach also supports dynamic sequencing, inflation protection, and liquidity management.

Regulatory pressure amplifies the urgency. Over 78% of firms have already tweaked their processes in response to the FCA’s retirement‑income review and the Consumer Duty’s emphasis on outcomes. As the April 2027 inheritance‑tax changes take effect, advisers who combine evidence‑based tools, transparent suitability letters, and flexible withdrawal governance will not only meet compliance expectations but also differentiate themselves in a crowded market. The firms that master this blend of technical rigor and human‑centric communication will set the new benchmark for what good retirement advice looks like.