What does an investor look like? Well, just like you
If you want to harness the full power of your pension, you have to start thinking of yourself as an investor.
What does an investor look like? A suited and booted City type, who’s a whole lot wealthier than you? Not so. Investors come in all shapes and sizes – and if you have a workplace or personal pension, you’ll see an investor when you look in the mirror.
Research by St. James’s Place and the Yes She Can project – a cross-industry initiative which aims to engage women to increase their understanding of and participation in financial matters – last year revealed that three-quarters of women don’t actually see themselves as investors, even when they have a workplace or personal pension.1 Equally, research by the People’s Pension found that people from minority ethnic backgrounds are losing out when it comes to pensions, with the average pensioner from a BAME (Black, Asian and minority ethnic) family £3,350 a year worse off than their white counterparts.2 That gap is even greater when gender is taken into account, too. On average, the gap in annual pension income between a female pensioner from an ethnic minority and a white male pensioner is 51.4%.3
So, why don’t they view themselves as investors – and why isn’t investing on their radar? What’s stopping them from paying adequate attention to their long-term financial goals? It could be because they don’t really feel ‘connected’ to their pensions. There can be a lot of complex and unfriendly jargon involved in conversations around pensions. Messaging might seem unrelatable or even irrelevant. And the products themselves just aren’t very user-friendly.
All of this – and the fact that workplace pensions are effectively administered on our behalf – can leave many feeling like they have, at best, a tenuous grip on their future savings plans.
Take control of your future
That needs to change. Why? Because your pension can be a powerful tool. When you’re in control of it, you can use it to turn your hard-earned money into a cushion that’ll support you as you get older.
It can help you to achieve your and your family’s dreams – whether your priority is to enjoy life after work, help adult children buy a home, or start your own business. Your pension money can even be a force for good in the world, if you invest it responsibly.
So, how can you take back control of your pension – and feel more like the investor you really are?
It’s not just about saving more – although adding in an extra £20 a month can make a big difference over the years as it could earn growth on top of growth. It’s also about how your pension can work smarter and harder in the years you have to build your wealth.
Pensions aren’t ‘one-size-fits-all’, after all. You have to personalise them. This starts with finding out where your pensions are invested (as many of us will have more than one).
Download your current provider’s app, dig out your login details or, if you are employed, speak to your employer’s HR team. Then evaluate your pensions through the eyes of an investor.
Ask yourself: How much is in my pot? What does my employer put in? Where’s my money actually going? And how are the funds performing? Is the current level of risk right for me?
Generally, when you save into a workplace or personal pension and don’t choose any funds yourself, you’ll simply end up with a default portfolio possibly based on your age. If it doesn’t meet with your needs, consider changing it.
Above all, though, have a clear idea of your savings goal – in terms of the retirement lifestyle you want – and the ‘magic number’ needed to achieve it. Is your pension currently on track? If it isn’t – well, then what can you do about it?
You don’t need to know everything
Of course, as you start to feel your way around the pensions subject, it’s possible – even likely – to be put off by the jargon. Or you might think you lack the ‘framework’ to make confident, informed decisions – because what exactly is ‘good fund performance’?
And that’s OK. You don’t need to know everything. Financial advisers – like those on hand at St. James’s Place – can talk you through the tricky stuff, understand what you’re trying to achieve (and in what sort of time frame), and help you plan how to get there.
Just remember: as your life changes, so should your pension. Reclaim it, make it work for you – wherever you are in your savings journey – and start acting like the investor you are.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.
An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society.
Based in Exeter, Fowler Financial Planning provides financial advice to individuals and SMEs in the local area, across the South West and in London. With an ever-changing environment and changing client circumstances, we feel it is essential to develop bespoke financial plans for clients to help them achieve their goals, and, more importantly, to review these plans regularly to ensure they remain current and accurate. Fowler Financial Planning is a Partner Practice of St. James’s Place Wealth Management plc.
Contact Fowler Financial Planning:
01392 790623 / 07931 443415
Fowler Financial Planning is a trading name of Fowler Financial Planning Ltd, an Appointed Representative of and representing only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website www.sjp.co.uk/products. The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.