Hello, hello, me again. First things first, big day today for the lang kitten v2.0 who is now – as a wise person pointed out – officially a teenage dirtbag. I’m much less bothered by that to be honest than by the fact that I’m now the parent of two teenagers and I’m far too young for that, don’t let the hairline fool you etc. It’s all very traumatic.  

When the lang kitten v1.0 turned 13 I showed her the Kevin The Teenager scene in time-honoured not-really-a-joke fashion. What larks and all that. For her younger brother I don’t really have to show him that as he’s been doing a decent Kevin impression for the last two and a half years, so here’s to the teenage years, eh?  

Actually, as I’m writing this I seem to remember doing an Update as v1.0 turned 13 and mentioning Kevin The Teenager then – that’s how long this ridiculous email has been going on.  

After Hard Stats and Proper Content from Rich last week – and what a fine Update it was – I thought I might lower the tone this week and share some stats from the FCA’s retirement outcomes data paper thingy that came out yesterday. (As ever, Tracker has been updated for subscribers, sign up today, #marketing).  

The cost of living crisis is still a thing, even if it seems remote to the more well-padded members of our industry, and that’s led to a rise in folk dipping into their pensions. This rise isn’t huge – about 5% or so – and the amount taken out of pensions has actually fallen. So it’s small pots getting stripped as people respond to financial pressures elsewhere, or perhaps decide that everything is going to hell in a handcart and they might as well have a holiday.  

There’s been some pearl-clutching about this, mainly from folk whose businesses rather depend on pension holders leaving their money alone for as long as possible. To me the trend seems entirely rational, and if we don’t like folk taking their pensions money out like this then we should probably stop shouting about how pathetically small most pots are, they won’t buy you a tin of dog food and all that. 

Ages ago I coined a phrase as a protest against the word decumulation, which I maintain is a heinous crime against the English language. That phrase was GYMBOA, which stands for Get Your Money Back Out Again. I wasn’t being entirely serious but I also wasn’t being entirely facetious either. The money never belonged to the insurer, or the SIPPco, or the adviser, or the platform. It’s easy to forget that sometimes, and in an industry which states very clearly and loudly that it doesn’t like people without hundreds of thousands invested, we mustn’t be surprised if folk take their money and run. 

(PS – GYMBOA was inspired by PEHDTSCKJMBA) 

Annuity sales also decreased by 13%, presumably for the reasons above and despite improving rates. UFPLS (honestly, what are we doing in this industry?) took up the slack. Only a third of consumers took advice before doing what they did, and of those purchasing an annuity only half took advice. Did those consumers make the best choice? I guess we’ll never know, but that’s the advice opportunity right there (and if you look at the tables, it wasn’t just sub-£10k pots that annuitised on their Jack Jones). 

I’m reminded of a story I got told about a chap with a big pension pot, who was recommended a lovely drawdown strategy with a lovely CRP and all that, and who bootled off and bought an annuity instead. The adviser was distraught, not least at losing 0.75% per year of the thick end of a million quid, and asked why the client had done this heinous thing which was going to give him a suboptimal outcome and so on. The answer was thusly: “I still get enough money to live on and I won’t have to interact with the financial services industry ever again apart from getting money in my account every month.” 

If there’s a point to this, it is that in the main, people act rationally. If it doesn’t look rational to you, look closer. 

Your music choice this week is in honour of the lang kitten v2.0’s birthday. If you haven’t heard him do Don’t Stop Believing…well, you’re missing what I can only describe as “an experience”. Happy birthday Mr P.