Damian Stancombe: Why IFAs Need a New Framework for Retirement Advice

Why It Matters

Without modern decumulation tools, IFAs risk losing control of client assets and relevance as retirees demand dynamic, health‑linked spending solutions.

Key Takeaways

• Half of UK 55‑64s rely solely on defined‑contribution pots
• 80% of over‑50s underestimate how long they will live
• Australian retirees leave ~65% of super untouched at death
• Current pension infrastructure favors accumulation, not flexible drawdown
• Open‑banking dashboards could give IFAs real‑time spending insight

Pulse Analysis

The surge in defined‑contribution (DC) pensions marks a structural shift in retirement planning. In the UK, almost 50% of people approaching retirement now depend exclusively on DC pots, a model originally designed for wealth accumulation. The 2015 Pension Freedoms introduced unprecedented flexibility, but the underlying infrastructure has lagged, creating a gap between how retirees want to spend and how the system delivers income. Longevity risk compounds the problem; studies show 80% of over‑50s underestimate their lifespan, risking premature depletion of assets. Meanwhile, overseas examples, such as Australia, reveal that many retirees under‑spend, leaving roughly two‑thirds of their superannuation unutilised at death.

For independent financial advisers (IFAs), this mismatch threatens their traditional advisory role. As retirees shift from a single‑payment mindset to ongoing lifestyle management, IFAs must move beyond portfolio allocation to become holistic life planners. The current decumulation pathway routes funds through retail banks, stripping advisers of real‑time visibility into client cash flow and spending behavior. This asset leakage erodes the adviser‑client relationship, making it harder to tailor advice that aligns with evolving health, family, and social needs. Consequently, IFAs risk becoming peripheral just when clients need strategic guidance the most.

A viable solution lies in building a regulated decumulation ecosystem that keeps assets within the advisory sphere while offering flexible access. Open‑banking APIs can feed live transaction data into adviser dashboards, enabling dynamic drawdown strategies that match actual spending patterns. Tiered debit cards, travel perks, and concierge services linked directly to pension balances can provide the convenience of banking without sacrificing investment exposure. By integrating these tools, IFAs can retain control, enhance client engagement, and position themselves as indispensable partners throughout the retirement journey, turning a structural gap into a growth opportunity.