HARRY’S STORY
For advisers onlyThis is for financial adviser use only and shouldn’t be relied upon by any
other person.
Harry’s 45 and married with two children.He’d like to save some of his salary into
a pension to provide an income in later life.
Here’s how our financial planning toolhelped to create a financial plan
to meet his needs.
2
ABOUT HARRY
• Harry’s a small business owner and earns £35,000 a year. He has an active lifestyle and is in great health, so he expects to live into his 90s.
• He’s always prioritised his business over saving for his future, so he’s only saved £60,000 so far.
• He plans to save £2,800 a year (8% of his earnings) into his pension and hopes to have contributed a total of £140,000 (including single contributions and transfer payments) into his plan when he reaches age 66.
It’s also important to Harry that:
• He has an income of £18,000 a year when he retires. • He can continue to live in his family home when he retires.• He understands the difference saving more into his pension could make to his retirement. • He can flexibly access his savings from age 55, even though he’ll still be working, so he can make
up any unexpected shortfall in his income.• He has a financial plan in place to give him peace of mind about his retirement goals. • His investments benefit from regular reviews, hands-on supervision and ongoing fine-tuning.
The recommended solution
Based on Harry’s needs, his financial adviser recommends that he takes out a Pension Portfolio plan with Royal London. Pension Portfolio has an integrated drawdown facility, so Harry can move seamlessly into drawdown – from within the same plan, when he reaches age 55.
Harry’s got an adventurous attitude to risk and would like his savings to grow as much as possible. However, he has a low capacity for loss, so his adviser has recommended that he invests in a more balanced investment – Royal London’s Governed Portfolio 4 (GP 4).
What investment growth is needed?
5.3%
This is the target growth rate needed
each year to help you meet your needs,
allowing for charges and inflation.
£160,000
Although it could be different when you
retire, you could use this to buy a secure
income of £47,000 a year from age 60
(based on an annuity rate of 4.7%) or
flexibly access your savings in later life.
How much do you plan to save?
£2,800
You plan to save 8% of your earnings
each year and have £160,000
when you reach your 66th birthday.
Harry Sample Financial plan
This plan is designed to help you achieve your financial goals. It's based on your current needs and circumstances and contains important information about your savings.
Age to plan to Current age
This financial plan covers the next 21 years.
22 May 2019
45 66
What do you want your savings to be worth?
Harry Sample financial plan 1234567
All the figures shown in this financial plan account for inflation.
Harry’s financial plan
After discussing his current needs and circumstances, Harry’s adviser uses our financial planning tool to create a financial plan that will help him understand the risks and rewards of investing in the stock market and how much he needs to save to achieve his retirement goals.
Harry will meet up with his adviser regularly to review his financial plan, to make sure it continues to meet his needs. In return for the services that he receives from his financial adviser, Harry’s agreed that an initial adviser charge of 2.5% and an ongoing adviser charge of 0.5% will be deducted from his plan.
3
HOW COULD HARRY’S SAVINGS PERFORM?
The chart below shows how Harry’s savings could perform in different market conditions, over the next 21 years.
Poor market
Harry could have £103,800 when he reaches age 66.
3 times out of 4, our financial planning tool expects markets to perform better than this.
Average market
Harry could have £140,000 when he reaches age 66.
2 times out of 4, our financial planning tool expects markets to perform better than this.
Strong market
Harry could have £187,700 when he reaches age 66.
1 time out of 4, our financial planning tool expects markets to perform better than this.
All the the figures shown are in today’s money. To find out more about the assumptions our financial planning tool uses, visit our website at adviser.royallondon.com/fpt
4
HOW ACHIEVABLE IS HARRY’S FINANCIAL PLAN?
When investing in the stock market, there are never guarantees.
To assess the likelihood of Harry achieving his financial plan, our financial planning tool uses a sophisticated economic forecast, provided by Moody’s Analytics.
This stress tests Harry’s plan by looking at 1,000 different ways the economy could perform over the next 21 years.
50%Harry’s forecast resultsWhile this isn’t guaranteed, it means that 500 times out of 1,000, our financial planning tool expects Harry to achieve his financial plan and his savings to be worth at least £140,000 when he reaches age 66.
How could Harry improve his forecast result?
Save more for his futureHarry might want to build up his pension savings by increasing his contributions.
Retire later Harry might want to retire later or work part-time to help his savings last longer.
5
WHY ROYAL LONDON?
Some of the reasons why Harry’s adviser has recommended Royal London are set out below:
READY-MADE INVESTMENTS We have a wide range of investment options, which can take account of Harry’s attitude to risk and plans for the future.
OUTSTANDING SERVICE We’ve consistently won five stars for our service, so you can count on us to deliver a great service when it matters.
CUSTOMER ENGAGEMENT We’ll help Harry keep an eye on his savings and our regular updates will support his ongoing conversations with his adviser.
FLEXIBLE RETIREMENT OPTIONS Our personal pension lets Harry take full advantage of the pension freedoms, meaning he can access his money in a way that suits him.
SHARE IN OUR PROFITS When we do well, we’ll aim to boost Harry’s savings by adding a share of our profits to his plan each year – we call it ProfitShare.
6
THE IMPORTANCE OF ONGOING REVIEWS
To make sure Harry’s financial plan continues to meet his needs, he’ll meet his adviser regularly. As part of this, they’ll consider:
• Changes to Harry’s financial goals or circumstances.• How Harry’s savings have performed.• Changes in market conditions.• Changes in legislation. • Whether any new products have become available.• Whether flexible access is a suitable product for him.
Harry will receive a yearly statement from Royal London to show him the value of his plan and the investment growth he’s had. Harry’s adviser can then use our client review service as part of their regular review process to start a deeper discussion.
BENEFITS OF OUR FINANCIAL PLANNING TOOL FOR YOU AND YOUR CLIENTS
• Client understanding Help your clients understand the risks of investing in the stock market and how much they need to save to achieve their retirement goals.
• Easy to use You only need to provide a few pieces of information to use the financial planning tool, you can save and compare several models and we’ll default some of the information for you, saving you time and effort.
• Professional client report You can create client reports to help you demonstrate the work you’ve done and the expertise you’re providing.
• Sophisticated economic model Our financial planning tool is powered by a sophisticated economic model, provided by Moody’s Analytics, who are known experts in this field.
• No extra charge We won’t charge you to use our tool, so you can provide a cost-effective planning service to your clients.
January 2020 L 2T PD 0005
Royal London1 Thistle Street, Edinburgh EH2 1DG
royallondon.com
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England and Wales, company number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL. Royal London Marketing Limited is authorised and regulated by the Financial Conduct Authority and introduces Royal London’s customers to other insurance companies. The firm is on the Financial Services Register, registration
number 302391. Registered in England and Wales company number 4414137. Registered office: 55 Gracechurch Street, London, EC3V 0RL.
For more information about how we can support you and your client through the
retirement planning journey, speak to your usual Royal London contact or visit
adviser.royallondon.com/fpt
