Gareth Horsfall of Spectrum Independent Financial Advisors responds to a reader’s letter...

Dear Editor,

I read the article by Mr Gareth Horsfall Retirement... and my mother in the last issue of the Insider and found it to be somewhat fear mongering. While on the surface Mr Horsfall’s message was admirable as he offered readers his insights into how to prepare for retirement, essentially this was a hard sell that used consistently threatening imagery and language to illustrate his point.

According to Mr Horsfall ‘…the sad truth is that only about 5% of people are on track to be fully financially independent in retirement. The other 95% think they’re safe, but on closer investigation are far from it’. But hang on a second, where did this notion of safety come from? I was sure that Mr Horsfall was talking about financial independence, not safety… Is he suggesting that 19 out of 20 people are in some sort of danger, danger, DANGER!!!

Then there was all the family-related stuff about not being able to see your grandchildren and the idea that ‘…you can no longer rely on anyone but yourself in old age’. That’s rather a bleak image to leave the article on Gareth, don’t you think? Especially after you’d built my hopes up about that ‘…comfortable retirement of warm slippers by the fire in winter and the sun of the holiday home in the summer’, which sounded great. Now you’re telling me that I MUST return to a mentality of saving for my future, which sounds less like advice and more like an ultimatum.

But lets not delude ourselves here. This was not an ‘advice piece’ or even a legitimate article for publication in a newspaper – this was a sales pitch, a thousand-word cold call, as further evidenced by the brash inclusion of Mr Horsfall’s company insignia at the grand finale.

One thing did raise a smile, however: the aptness of the financial advisor using his own grandmother to close the deal. Some stereotypes are priceless.

 Beppe Grigio

Rome

 Gareth replies: In my opinion, what emerged from Mr Grigio’s letter was more his weariness of my supposedly

hidden professional motives for writing the article, and less an informed understanding of the points I was trying to make. My article was based on my experience of growing up in the UK and my mother's financial set-backs, from getting divorced to being mis-advised about her investments.  This is my family reality. The fact that my personal history influenced my career choice, as well as the ethical approach I have always prided myself in, is something I regularly discuss with my clinical psychologist wife. What seems "cheap" to me (and rather boring, I must admit) is the constant stereotyping financial advisors have to fight against before they are even listened to. It seems to me that Mr Grigio's sharp comments were driven more by this rather stereotyped view, than by any evidence-based valid counter-argument.

The facts are clear and for anyone to verify. Only 5% of people are on track to become financially independent when they retire.  This is evidenced by numerous studies undertaken over many years.  However, financial "independence" is subjective.  In the case of my mother, she needs to have enough money for food, clothing, heating the house and to pay all her bills, as well as have sufficient funds to fly to Italy to see her grandchild a few times a year and see her daughter who lives elsewhere in the world. Being able to afford all this would constitute ‘financial independence’ for my mother.  The stark reality is that she will need to count the pennies to get there.

Many women are likely to suffer the same fate due to divorce, spending years out of the work place whilst they bring up the children, and have limited time to build financial security/safety for themselves. And yes, Mr Grigio, there is a danger in not being financially secure and independent in old age - the danger of becoming vulnerable through ill health one cannot afford to take care of, for example. And, yes, I would go as far as write DANGER in capital letters. In my personal and professional experience I have, unfortunately, witnessed many older people (and even younger ones, for that matter) finding themselves in danger (may I use this word now?) of losing their beloved homes and treasured goods, causing them all sorts of anxieties and fears, and often leading to very serious practical and emotional problems. 

Furthermore, I will again stress what has become a reality for some time now: ‘You can no longer rely on anyone but yourself in old age’.Unemployment is high, inflation is on the rise, pension savings are at all time lows, final salary pension schemes are closing at the highest rate ever, school and University costs are rising, and the Governments around the world are heavily indebted.  So exactly who else is going to look after my Mother (or me for that matter) in retirement?  My extended family? Unlikely since they undergo the same daily struggles to keep up with the rising cost of living and providing for their families. Inheritance? Well, it would be nice but again unlikely.  In the event that my Mother has to go into assisted care when she is older, all her assets will be sold to cover the costs of care.  Alternatively, she might want to spend it, or give it away.  Governments are also reducing old age state pension benefits and increasing the retirement age to protect against further debt.  So, once again Mr Grigio, who do we rely on, if not ourselves? I am certainly aware that the issue of looking after one's elderly parents and relatives is also "cultural". However, even in Italy where more generations may still be living together, this is becoming less common, and the cost of "in-house" elderly care is around 1000 Euro per month (usually paid with the pension of the relative who is looked after or that of her spouse).

And finally, yes Mr Grigio, I am indeed saying that we must return to a mentality of saving for the future if we want to retain our independence and dignity. Whether the ultimatum-like tone of this advice is too irritating for you to contemplate the serious and timely quality of what I am saying, this is entirely up to you.

Gareth Horsfall is now working for the Spectrum IFA group, in Italy.