I've been pretty cynical of the long term life assurance industry for quite a while now. The old joke "life assurance is about putting money away so that you can retire wealthy when you're older and investment advisors can retire wealthy when they're young" is a little too close to the truth to be funny.
And that was when the life assurance style investment business looked like it was doing well. Things aren't looking so rosy at the moment.
In this story it's evident that pension funds are cash-strapped for a number of reasons. Quoted are rising administrative costs (you betcha the administrators will pay themselves first), reduced contributions (contributors are also cash-strapped), increasing withdrawals (people want their money) and poor investment performance (the GFM).
What isn't mentioned is it was fund managers/investment advisors that built the bubble in the first place, but perhaps we can touch on that later.
Bottom line - if you're relying on a pension fund as your retirement strategy, you probably won't be pleased to hear this:
Yep - best to put off retirement just at the moment.Padayachee said "one-size-fits all advice" was not the solution but preservation of pension fund value was the cornerstone of a general strategy to deal with the situation.
"This implies that delaying retirement is arguably the best solution at this time, pending a return to greater profitability of the markets and consequently of pension fund investment performance."
So it's with some sense of relief I see a story like this:
Could this be the end of blind faith in the value of institutionalised retirement funding?The equity market crash and credit crunch will be the death of the old-style financial advice industry. That's the market forecast from investment industry trend-spotters at Barnard Jacob Mellet Private Client Services (BJM PCS).
Tony Barrett, head of Wealth Management at BJM PCS, said in a statement on Monday that consumer distrust and cynicism are inevitable after market falls of up to 60 percent amid press reports of excessive rewards in the international financial services industry.
He pointed out: "You can expect very jaded perceptions from saver-investors who have to work flat out to repair damage to their pension planning while well-remunerated financial industry personalities continue to do very nicely.
"Yesterday's apathetic consumer is likely to be replaced by an extremely alert, even mistrustful consumer."
full story from Business Report here
Personally I hope so.
What do you think?