Good morning and welcome to your Morning Briefing for Thursday 13 July, 2023. To get this in your inbox every morning click here.
Annuities important role in planning later life
Global WealthTech company GBST has said annuities will play an increasingly important role in planning later life finances.
A new whitepaper from GBST anticipates greater innovation in the UK retirement income market.
The report, which analysed the income solutions currently available to those approaching and in retirement, showed that changing regulation, longevity, wealth, and retirement norms are reshaping later life income needs.
And as a result, advisers and investors will increasingly need to take a more ‘mix and match’ approach to retirement income planning with greater emphasis on guaranteed income solutions.
Financial psychology
Understanding a client’s motivations for wanting to reach a certain amount of money is vital for a financial adviser.
According to Ramit Sethi, author of I Will Teach You To Be Rich, the psychology behind people’s relationship with money is very under-rated.
In a 2021 interview with Harvard Business Review, he said one of the misconceptions about money was that it was all maths.
“We believe there is a mathematically correct answer for questions like, ‘Should I buy a house or rent one?’ or ‘Should I go to graduate school?’ or ‘Should I take this job?’ or ‘Should I negotiate a higher salary?’
“Sure, doing the math can help you answer these questions, but there’s no fool-proof formula to making money decisions.”
Quote Of The Day
To maximise the benefit of this consolidation policy, then Government action must be swift. As part of the solution, it is essential to ensure a fast and cost-efficient transfer process, allowing for consumers to reap the benefits of consolidated pots as quickly as possible.
–Carol Knight, director of TISA Exchange Limited, commenting on government commitment to a consolidator model for small pots.
Stat Attack
New research from Mintago reveals the factors causing the most stress among UK employees. The data shows that female employees are more likely to be suffering from financial stress than their male counterparts.
Almost one in two (48%) female employees are either ‘very’ or ‘somewhat’ stressed, while less than a third (31%) of male employees said the same.
When asked about the factors that were contributing to their stress levels, 69% of female employees cited the rising cost of living is their top concern. Only 52% of male employees selected this. General money or financial worries were the second most common source of stress for both men (48%) and women (65%), with again female employees far more likely to have this playing on their minds.
Further down the list of stress factors, however, the survey found that men (24%) were more stressed about their job security than women (19%).
UK employees were asked to select the factors that were potentially contributing to their stress in the current climate. Here are the top ten:
| Which of the below factors contribute to your stress? | All | Male | Female |
| Rising cost of living | 62% | 53% | 69% |
| Money and finances | 58% | 48% | 65% |
| Work pressures | 45% | 41% | 48% |
| My own health and fitness | 33% | 37% | 47% |
| Family issues | 32% | 24% | 37% |
| Future planning | 27% | 21% | 32% |
| The health of my friends and family | 27% | 26% | 27% |
| My appearance | 25% | 17% | 29% |
| Job security | 21% | 24% | 19% |
| Romantic relationships | 20% | 21% | 19% |
Source: Mintago
In Other News
Schroders has released a new framework to assess human capital value creation. This includes a simple set of quantitative accounting metrics which can be used alongside qualitative techniques to enable investors to refine their understanding of human capital management’s contribution to a firm’s returns and productivity.
Created with academic support from the Oxford Rethinking Performance Initiative at Saïd Business School, University of Oxford and California Public Employees’ Retirement System (CalPERS), the analysis confirms that human capital is a clear driver of company productivity and profitability and that companies with durable management frameworks create stronger returns and value for investors.
Schroders head of sustainable research Angus Bauer said: “This research tells us that investors cannot ignore human capital management in evaluating investee companies. As we approach continued economic volatility, our analysis shows that companies with strong human capital management are likely to be more capable of navigating the future effectively. Even as the integration of artificial intelligence across industries evolves, the relevance of people as the stewards of value creation will remain high.”
TMA Club has announced the launch of a new partnership with Cirencester Friendly, adding its range of protection products to the TMA protection panel.
Through the partnership, TMA Club’s directly authorised (DA) brokers now have access to the society’s latest benefit, as well as its standard range of income protection products, including no premium loading for smoking, occupation, or hazardous pursuits, excluding motor sports and a wide range of deferred periods including split deferred.
The friendly society also offers added-value benefits to members outside of its products including year-round support, not just at point of claim. They have an excellent reputation for customer service and claims management, with a payout rate of over 95% in 2022.
DA brokers can also offer its newly enhanced ‘temporary suspension of cover’ option, which allows clients to defer their protection for up to 12 months for whatever reason, without paying a holding premium.
From Elsewhere
Elon Musk launches AI firm xAI as he looks to take on OpenAI (Reuters)
King’s coronation weighs on economy as output contracts by 0.1% in May (Sky News)
UK cost of living payments were ineffective sticking plaster, IFS says (The Guardian)
Did You See?
Robin Powell: The voice with nothing to sell is hardest to hear
He writes: “Over the years, I’ve often bemoaned the lack of attention the media gives to low-cost, evidence-based investing. But I absolutely understand it.
“Journalists, of which I’m one myself, constantly need stories. We need new things today; that’s why it’s called news. It’s not because journalists are biased that they’re far more likely to write about active investing than buy-and-hold indexing. It’s because indexing, frankly, isn’t much of a story.”
Read the full article here.
