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Retirement Planning
Q. What is the legal definition of retirement?
A. ‘Retirement is the withdrawal from one's position or occupation or from one's active working life.’
Or, to put it another way, hopefully the longest holiday you’re likely to have.
Some people choose to end their working life, retire and sail off into the sunset as it were, never to be seen again. Others, however, may choose to go into a phase known as ‘pre-retirement’ which is the period between deciding to retire and actually doing so – a kind of adjustment period or trial-run. Either way, retirement can be a daunting step to take.
I’m sure that we all live in hope of reaching our retirement and enjoying the feeling of doing whatever you want, financials notwithstanding. Sadly, some folk, like my own father, never make it to retirement, passing away in his 64th year. A good friend once said to me that it’s like a batsman being bowled for 99. That may be a little simplistic, but I got the point. My father would have probably seen the funny side as well.
So why is retirement an issue and, more to the point, what has it got to do with what RWA - after all, we are not pensions/retirement advisers.
You see the thing about retirement is that eventually we all have to call time on our working lives, and we need to plan how we achieve the financial capability to retire. For those that own a business, and even have employees, there is a lot more to consider.
When you own a regulated company, it isn’t simply a case of pulling down the blinds, locking the door and walking away. What about the client base the business has amassed? And if you have employees, what happens to them?
Quite often, broker business owners will want to retire but won’t know what to do with their business. There are numerous routes that could be explored, possibly with the help of a specialist/expert.
Here are just three scenarios:
- It could be that the senior management team at your firm would like a shot at running the business but they don’t really know how to go about it.
- The owner may choose to sell the business lock, stock and barrel so that the staff are protected.
- The owner may simply choose to sell the book of business to another broker as they have no staff.
Remember that the FCA will be very concerned as to who will take care of your clients once you are gone. This is where succession planning comes in.
The fact is, as with any form of retirement, you need to plan ahead wherever possible. It can be worth talking to experts who can advise on a course of action. Also, talk to people you may know who have been through the process themselves.
Remember, if you are a business owner, your retirement will not just affect you, but it will potentially also impact upon your employees and their families.
As always, RWA is here to help if needed. We are not ‘just’ compliance consultants. If you would like to discuss the options open to you, please get in touch with your RWA Business Manager.