Healthy Life Expectancy (HLE) measures how long an individual is expected to live in ‘very good’ or ‘good’ health based on perceptions of their own health.

In the 2021/23 period, males aged 65 years could expect to spend 10.1 years of their remaining life in good health compared with 11.2 years for females.

Stephen Lowe, group communications director at retirement specialist Just Group, said HLE figures had shown improvements for older age groups until the coronavirus pandemic but much of the gain has since been lost.

“The impact of the pandemic is still being felt with HLE lower than a decade ago for most age groups and just a small rise for older age groups,” he said. “Women in younger age groups have seen a steeper decline than men, but a bigger improvement in older age groups.”

Stephen Lowe said that perhaps the most worrying aspect is that HLE in the latest 2021/23 period shows continued falls over 2020/22 for most age groups, suggesting improvements may be some way off.

Life expectancy figures for England and Wales, based on historic death rates so taking no account of likely healthcare improvements, had shown improvements back to very near pre-coronavirus heights.

“If life expectancy at 65 is improving more quickly than healthy life expectancy, effectively people are spending more of their lives in poor health which has implications for both the health service and for social care,” he said.

“The figures are a reminder for people nearing retirement of the importance of planning for several decades in retirement, to make the most of what time you have but also to have a plan should your health decline.”

Going forward, financial advisers will need to have a much deeper understanding of a client’s finances and assets in order to deliver the most valuable and tailored advice. One long-neglected element of this full picture is an understanding of a client’s property wealth.

The urgency cannot be overstated. According to Scottish Widows’ latest Retirement Report, a third of Brits may retire without enough to pay for essential bills, with planning complicated by economic uncertainty, rising interest rates and the cost-of-living crisis.

Pension income alone is no longer enough. People need a clearer picture of the full extent of their finances if they are to retire with enough money, and property wealth is a significant factor.

Property, pensions, and the problem

According to the Office for National Statistics (ONS), outside of private pensions, more UK personal wealth is accumulated in property than anything else.

Yet while advisers often gather property wealth information as part of their fact-finding process, there is huge variation in how this information is incorporated into advice, if at all.

A pensions crisis looms, and property wealth is a sleeping giant.

Of course, it’s easier said than done. There is a significant challenge for advisers such as a lack of consistent and reliable property data upon which to base robust advice.

For example, an adviser may need to guide a client on whether it is more tax-efficient to draw down from their pension or release equity from their property investments. This is exceptionally difficult without access to meaningful valuations of the properties in question.

Connecting the dots – property data and its use in financial advice

For decades, vast amounts of property data have been largely siloed and underutilised. A lack of data sharing across different players and parts of the industry has led to difficulties in harnessing it for actionable insights. This has in turn hindered financial advisers when it comes to integrating property wealth insights into financial planning.

However this is changing, market players with huge amounts of data, like local councils, HM Land Registry, property-selling platforms, and financial institutions, are working to bring transparency to the industry.

This is being driven from the top – through the Geospatial Commission’s plans to improve the UK’s property data system and HM Land Registry’s plan to digitise the industry and empower better data sharing.

The Home Buying & Selling Group also recently launched its Property Data Trust Framework 2.0 to allow different players to share data in a trusted way, which is being compared to the open banking boom in financial services. This is all good news for financial advisers that need to start integrating property wealth into financial planning.

Additionally, while it is necessary to break down the silos restricting traditional property data points, non-traditional data points are also powerful drivers of meaningful valuations. A McKinsey study shows that when predicting house prices, nearly 60 per cent of the prediction power can come from non-traditional variables, such as data on surrounding services like shops, schools, and even coffee shops. With so many elements necessary for accurate house valuations to support conversations about property wealth, it is understandable that this topic has taken a back seat in advice conversations.

Integration issues and harnessing actionable data

While there has been progress in making reliable and accurate data available, financial advisers still have a property data integration problem. Without the ability to integrate property wealth insights into advisory software, advisers’ ability to deliver against the new Consumer Duty rules is hampered.

Advisory firms use different combinations of back-office software, with firms using an average of five systems in the process of giving advice. A report from Origo found that 85 per cent of advisory firms believe that a lack of integration is a serious cause of inefficiency within their businesses.

Only by stitching all the data points together, can we be assured of quality property valuations, which are essential to get a complete picture of a client’s assets and overall wealth. Naturally, there is growing appetite from the adviser community for technological solutions to enable property data to be better incorporated.

Clients not having enough money for retirement is not only an immediate cause for concern, but an issue that may plague generations to come. With regulation increasingly focused on protecting consumers, property wealth is essential to gaining a more complete understanding of a client’s financial situation and make informed retirement decisions.

However, to turn this into a reality, progress in deciphering relevant insights from a growing pool of property data must continue, as well as addressing the issues with incorporating this data into accurate advice.

In a competitive and increasingly regulated environment, clients not only expect more, but have a right to receive it. Advisers that connect the property data dots and gain a deeper understanding of their clients’ financial situations will be the ones who don’t fall short of Consumer Duty requirements and thrive in the long run.

This article was written for International Adviser by Roland Whyte, founder and chief executive of Nokkel.

While this is a 0.4% increase from Q1 2023, figures are still 1.6% lower compared to Q2 in 2022.

Women as a percentage of employees in financial services have been steadily falling, as records show that in Q1 1997 women made up 53.5% of the sector, 10.8% more than today.

This is reportedly most likely due to the decline in traditional administrative jobs and growth of IT use in the sector.

However, overall employment in the sector for Q2 went up 5.7% to 1.53m, making it the highest number of employees in the sector and the highest share of all UK jobs since records began.

Nikola Southern, employment partner specialising in financial services at law firm Kingsley Napley, said: “The financial services gender balance figures are surprisingly positive for an industry which still suffers reputationally as far as employment of women is concerned.

“If improvements are to be made, financial institutions should pay heed to wider societal trends and ask why they are still outliers in 2023. In particular, they should be looking to ensure their culture is not a deterrence for female employees, that discrimination in all its guises is eliminated and that modern family and menopause policies are adopted to support their female staff.”

But analysis by advisory firm LCP found that these plans have been “blown out of the water” as the expected improvements in life expectancy have failed to materialise.

The company believes that if the government sticks to its 2013 policy of linking pension age to life expectancy – as calculated by the Office for National Statistics (ONS) – the increase to age 67 should not happen until at least 2051.

Additionally, a move from 67 to 68 would not bee needed until the mid-2060s, it added.

The ONS projections for 2020 could further erode the government policy if they will take into consideration the impact of covid-19, which will undoubtedly impact life expectancy calculations and imply even further delays to state pension age increases.

Although pushing back increases would cost the Treasury around £195bn ($257bn, €228bn) in savings on state pension expenditure, the measure could provide a ‘reprieve’ to over 20 million people born in the 1960s, 1970s and 1980s, LCP claims.

‘Revisited’

Steve Webb, partner at LCP, said: “The government’s plans for rapid increases in state pension age have been blown out of the water by this new analysis.

“Even before the pandemic hit, the improvements in life expectancy which we had seen over the last century had almost ground to a halt. But the schedule for state pension age increases has not caught up with this new world.

“This analysis shows that current plans to increase the state pension age to 67 by 2028 need to be revisited as a matter of urgency. Pension ages for men and women reached 66 only last year, and there is now no case for yet another increase so soon.”

In its Wealth and Assets survey, the ONS revealed that among those aged 65+ nearing retirement, over a third do not believe they will be able to maintain an equivalent standard of living in later life. 

Talk about money 

Alex Price, director of financial planning at Charles Stanley, said that even through people are counting on the money that is going to be passed down from family and relatives, this doesn’t mean they shouldn’t talk about it. 

“As the cost of retirement soarsn it’s unsurprising that 17% of adults plan to use their inheritance for later life,” Price said. 

“Our own research shows a similar pattern, as we look set to receive an average inheritance of £78,000 ($100,268, €85,488) from our parents, with one in seven already mentally spending it and earmarking the cash to fund retirement costs.  

“However, this significant transfer of wealth is rarely talked about, with just a fifth of adults admitting that their family discusses inheritance, risking bigger inheritance tax bills than are necessary.   

“It’s important that families have the ‘money talk’ so they can plan ahead and as much of their hard-earned money as possible is passed on to loved ones so they can make the most of it.” 

Equity release

But people are not only looking to their prospective inheritance to fund their retirement.

According to Jim Boyd, chief executive of the Equity Release Council, many people are considering drawing on the value of their property to ensure a comfortable retirement. 

“This data highlights a looming later life funding crisis on the horizon, as a third (37%) of consumers aged 65+ are not confident they will be able to maintain a standard of living in retirement.  

“As consumers seek to understand how best to support their standard of living over ever longer retirements, our research shows homeowners are increasingly looking to their property wealth, with 51% of homeowners aged 45+ viewing money invested in property as part of their later life plans,” he added.  

“This is hardly surprising when one considers rising pension incomes have stalled, with the average pensioner’s weekly income just £7 higher in real terms than in 2009/10.

“At the same time income from property holds significant potential, with the average homeowner in England and Wales able to unlock around £88,290.” 

Education and planning at the forefront 

Boyd believes that pensions alone are not fit to cater for retirement needs anymore, and with increasing longevity, people need to turn to other options that can feed into their later life income streams.  

This is where seeking financial advice and planning becomes paramount. 

“Pensions cannot work in silo to fund longer lives and the intensifying strain on households highlights the urgent need for a more joined-up approach towards how people plan financially for retirement that considers a range of assets.  

“Educating consumers on what sources of funding are available to them is vital, as well as the safeguards and protections in place if they choose to access property wealth in later life.”