Complex retirements
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The psychology of retirement
Bridging the advisers-clients gap: How emotional intelligence can help build deeper trust with clients and better understand their financial goals
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What are the needs at each stage of a retirement journey?
The financial needs of retirees change dramatically from one phase to the next. From accumulation and protection to resilience and stability, retirement planning must also evolve to align with the individual’s needs
Does emotional intelligence offer advisers an edge?
James Woodfall explains why emotional intelligence is a critical skill that enables financial advisers to build trust, navigate client emotions, and deliver better outcomes
Video: Retirement strategies
Perspectives on key questions around retirement: How can advisers tackle retirement income challenges and find opportunities in an era of ongoing policy changes and market volatility?
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Today’s non-linear retirements require a different approach
With longevity increasing, experts urge a shift away from the ‘one-size-fits-all’ 4% withdrawal rule, advocating for flexible, personalised strategies tailored to individual needs, risks, and market realities
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A growth option with added peace of mind
Wrappers to meet all client needs
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Tackling retirement income challenges and finding opportunities
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Important information Issued by Financial Administration Services Limited, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM0825/404983/SSO/0826
For some clients, the first day of retirement may feel less like freedom and more like free fall. Despite years of planning, the sudden loss of structure and professional identity can trigger anxiety and uncertainty. This is a sign that retirement is not just a financial event but a psychological one. Increasingly, advisers find themselves acting as retirement coaches, supporting clients through the emotional transitions that accompany this life stage, alongside the technical aspects of financial planning. “A key non-financial issue is that our identities are very strongly tied to work,” explains James Woodfall, Communication and Behaviour Specialist at Raise Your El. “When clients transition into retirement, they lose part of that identity.” Woodfall, a former financial planner, now works with firms to incorporate emotional intelligence into advice processes to improve company performance. He notes that the disruption to long-standing routines, often structured around work, can leave clients struggling. The need to re-establish internal schemas, routines, and behavioural cues presents a psychological challenge not just for clients, but for the advisers supporting them. “As advisers, we’re not formally trained to help people through this transition,” Woodfall continues. But in many cases, advisers may be the only professional clients speak to about the psychological aspects of retirement.
“Research suggests that people take around three years to adjust psychologically to retirement,” Woodfall explains. During this time, advisers have a crucial role to play in preparing clients, not just financially, but behaviourally. For example, encouraging clients to visualise a typical post-retirement day or week can be useful. One adviser Woodfall worked with even encouraged a client to role-play a social event, rehearsing how they would introduce themselves without a job title. “This helped the client establish the mental and emotional foundations needed to navigate retirement more confidently,” Woodfall adds. Where a phased or gradual retirement is possible, the transition tends to be smoother. In contrast, “cliff-edge” retirements - when clients stop work abruptly - can be destabilising. “It’s too much change, too quickly, without time to prepare for the future,” says Woodfall.
Meanwhile, there’s often a gap between how clients imagine retirement and the lived experience. While many anticipate relaxation and leisure, the absence of structure can quickly lead to boredom, loss of purpose, and social isolation. “Experience updates the plan,” says Woodfall and advisers are well-positioned to help clients recalibrate as they test assumptions and uncover what retirement really looks like. Key questions to explore with clients may include:
Retirement expectation versus reality
“People take around three years to adjust psychologically to retirement. During this time, advisers have a crucial role to play in preparing clients, not just financially, but behaviourally”
Understanding the retirement timeline
• How will you structure your time daily and weekly? • What roles or activities will replace work as sources of meaning or purpose? • How do you want to feel in retirement, and what supports that?
Drawing on case studies or anonymised examples from other clients can help normalise these discussions and add depth to planning conversations.
Saving for retirement versus spending
For some clients, anxiety may be focused on spending in retirement, especially after decades of saving for homes, education, or retirement itself. “Don’t underestimate the power of the saving habit,” Woodfall warns. He shares the example of a client who, despite selling a business for over £20 million, became extremely frugal in retirement due to fear of running out of money. “Emotion takes over and can override logic,” he explains. To counteract this, advisers may want to implement new behavioural strategies, such as simulating a salary through regular drawdowns, to ease the psychological transition. And to help develop the adviser-client relationship, it is also essential to acknowledge client concerns empathetically. “If a client says they’re worried about running out of money, don’t say ‘That’s silly, you’ve got £20 million.’ Dismissing fears undermines trust. Our job is to flex to the client, not expect them to flex to us.”
Retirement coaching
Advisers already use many tools to support clients through the non-financial aspects of retirement. Behavioural coaching frameworks can add further structure and depth, such as Martin Seligman’s PERMA model – Purpose, Engagement, Relationships, Meaning and Achievement. Combined with life-timeline exercises, it can prompt reflection on formative experiences and spark ideas for fulfilling activities in later life. Technical planning tools also play an important role. Modelling “phased retirement” - reducing workdays over several years – can soften identity and routine disruption. Incorporating “pre-mortem” planning into cashflow models allows advisers to stress-test against market volatility, longevity risk, and major expenses, then develop mitigation strategies in advance. As one of life’s biggest transitions, not just financially, but psychologically and emotionally, advisers who understand and support clients through retirement changes offer significantly more value than those who focus solely on the financial numbers. And by combining technical planning with behavioural insight and empathy, advisers play a critical role for clients.
“Incorporating “pre-mortem” planning into cashflow models allows advisers to stress-test against market volatility, longevity risk, and major expenses”
James Woodfall Communication and Behaviour Specialist, Raise Your El.
Complex retirements need straightforward expertise
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Discover more from Fidelity on how emotional intelligence can foster better client relationships.
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How will you structure your time daily and weekly? What roles or activities will replace work as sources of meaning or purpose? How do you want to feel in retirement, and what supports that?
Retirement today happens in multiple stages — each requiring a tailored approach to income, risk, and lifestyle. From capital growth and risk reduction to flexible income and longevity protection, modern pension strategies should be adaptable to the retiree’s individual journey. “The accumulation stage is quite simplistic – it's about trying to turn income into as much capital as possible,” says Paul Squirrell, Head of Retirement and Savings Development at Fidelity. “If you're starting your retirement saving in your early 20s, then risk is largely irrelevant because you've got a long term.” But as retirement draws closer, things change. “You’ve got that risk zone when you approach retirement” he says — a phase where exposure to market losses can be much harder to recover from.
In the five to ten years before retirement, priorities begin to shift from accumulation to preservation. “The first thing is to establish what you intend to do in retirement and plan in advance,” says Squirrell. “For me, what is absolutely crucial is identifying the intended process as early as possible,” he says. This helps determine asset allocation, risk exposure, and whether income guarantees may be appropriate. “For example, if I’m going to annuitise in the lead-up to retirement, then it’s essential to preserve the capital – so the usual approach would be to go into gilts or cash, or a combination of the two,” he explains. “However, that approach is not sensible if my intention is to go into drawdown because you don’t want to de-risk something that you’re then going to put back into risk for 30 years.” Squirrell adds: “It isn’t a case of getting to retirement then deciding what to do. Planning needs to take place in advance.”
The transition into retirement often includes winding down work, taking partial benefits, or phasing into decumulation. “As you start to reach retirement, it’s a case of identifying risk and aligning it to the timeframes and money that you’re going to need,” says Squirrell. “As people approach retirement, they’re less willing to take risk. They can’t rebuild the income, so what happens if there is a 20% fall in the markets?” he says. “When living on a finite amount of money, the capacity to absorb loss has got to be greater.” One major consideration in this phase is sequence-of-returns risk — poor market performance early in retirement. “Losses plus withdrawals do not go together because what it’s going to do is compound any damage that is done.” Squirrell advises identifying future cash flow needs as early as possible. “If I’ve got an idea of what sort of capital I’m going to need for expenditure, then I can start thinking about reserves.” He also advocates diversification: “Having different options in terms of meeting your income needs is quite important, including from different types of tax wrappers.” This is where bucket strategies can be effective. “Start identifying what’s needed over different timeframes and put the right level of risk against each,” he says. This allows near-term needs to be met with lower-risk assets, while longer-term funds remain invested for growth.
Transition: Reducing sequence risk and building resilience
Paul Squirrell Head of Retirement and Savings Development, Fidelity Adviser Solutions
Pre-retirement planning
Later retirement: Preserving stability and simplifying income
In later retirement, the focus often shifts from maximising returns to maintaining simplicity, security, and peace of mind. Spending may decline, but new pressures — such as care needs or cognitive vulnerability — can emerge. Once again, this is where early planning pays off. “If you haven’t done that analysis right up front, then you won’t know what flexibility you’ve got,” he says. By clearly distinguishing essential from discretionary expenditure earlier in retirement, income can be adapted more easily in response to changing health or lifestyle. Beyond technical planning, Squirrell highlights a vital but often overlooked factor: behaviour. “You can’t underestimate the importance of the psychology,” he says. “Particularly things such as vulnerability.” As clients shift from saving to spending, emotional support and clarity become just as important as portfolio design. “The peace of mind that comes from knowing you’ve got the essentials covered — that’s a big part of it.”
“As people approach retirement, they’re less willing to take risk. They can’t rebuild the income, so what happens if there is a 20% fall in the markets?”
Read more from Fidelity on retirement strategies.
Financial advice is often seen as a numbers game – the right asset allocation, the optimal drawdown rate, the tax-efficient strategy. But for James Woodfall, Communication and Behaviour Specialist at Raise Your EI, the real differentiator for high-performing advisers lies in emotional intelligence – the ability to recognise, understand and manage emotions. “Advisers need to offer a great deal of emotional reassurance to clients,” says Woodfall. “From helping them navigate the identity shift associated with retirement, behavioural resistance to spending, and lifestyle changes after leaving work – and often without specific training in these areas.” It is in these moments, he argues, that emotional intelligence becomes not just a helpful trait, but an essential professional skill. And at the heart of that skill is the ability to build, deepen, and sustain trust to support long-term client growth.
For Woodfall, trust is the key currency in adviser-client relationships. A former adviser himself, he knows that trust does not simply appear because of a financial qualifications or years of service. Rather it is earned through how advisers listen, respond, and adapt to individual clients. That process begins with emotionally intelligent communication: listening without bias, showing genuine curiosity, and making the client feel understood rather than hurried toward a pre-packaged solution. He warns that pushing an unsuitable solution to a client can backfire. “If you try to force a solution on someone who is not ready to hear it, they will shut down. It is important to work with what the client is comfortable with, even if it means a slower path to a ‘correct’ answer.” Woodfall emphasises that trust also is not something that is built in the initial stages of a client relationship. It must be maintained to be truly enduring. “Even after a decade with a client, if their fears are dismissed or belittled, the balance in trust will erode.” That is why ongoing sensitivity is essential, from validating concerns, explaining options transparently, and matching the pace of advice to the client’s readiness.
Moreover, a significant part of emotional intelligence is noticing what a client’s behaviour reveals an issue, sometimes more than their words. Hesitation, a shift in body language, or a change in tone may signal discomfort or anxiety. For Woodfall, The skill lies in reading the moment accurately and adjusting the conversation accordingly. Such cues are prompts for a judgement call: is this the moment to explore a subject further, or is it better to hold back and revisit later? “Emotional intelligence is more of an art than a science,” he says. “Push too hard and you risk damaging trust; hold back too much and you might miss something important.” An ability to spot what’s unsaid is particularly important with clients who are cautious about opening up. Some may keep emotions out of the discussion initially, preferring to focus only on numbers.
Recognising emotion in behaviour
Communication and building trust
Cognitive empathy
Empathy is also a key element of emotional intelligence, although it does not always require personal experience. Instead, advisers can draw upon their professional understanding. “This is called cognitive empathy,” says Woodfall. “You may not know what something feels like first-hand, but you can understand it and respond appropriately.” Developing cognitive empathy often comes from both observing and researching how people adapt to change, handle uncertainty, or make decisions under pressure. This understanding helps anticipate emotional reactions and support clients more effectively.
Self-regulation for advisers
Emotional intelligence is also important in managing the emotions of the adviser. They work in a cognitively and emotionally demanding role, yet are expected to project calm and confidence, even in turbulent markets or during difficult conversations. Those with strong emotional intelligence can regulate their own responses, preventing anxiety or frustration from leaking into the interaction. By staying composed, advisers create a sense of stability that clients can lean on, especially when they are feeling unsettled themselves.
Developing emotional intelligence
Role-playing difficult scenarios, studying behavioural cues, and learning from psychology can also develop advisers’ ability to connect. For Woodfall, the formula for success is clear: “Combine technical expertise with empathetic coaching, and you deliver truly holistic advice.”
active listening seeking feedback reflecting on challenging conversations practising adaptable communication.
Emotional intelligence will vary from one adviser to another, but unlike technical qualifications, emotional intelligence isn’t a fixed credential – it’s a skillset that can be developed over time. Woodfall encourages advisers to work on:
“Trust does not simply appear because of a financial qualifications or years of service. Rather it is earned through how advisers listen, respond, and adapt to individual clients”
Discover more from Fidelity on how enhancing your emotional intelligence can help your clients.
Driven by regulatory reform, demographic changes and evolving client expectations, there has been a significant shift in the complexity of financial advice for both advisers and their providers. As a result, the advisor’s role has become more critical than ever as they face market volatility, ongoing regulatory and tax changes, and the necessity of tailoring advice to the individual’s needs. So how can advisers best approach some key questions they are faced with today? When does retirement planning typically begin? What are the main challenges as a client approaches retirement? Why is cash flow forecasting so important? What impact will policy changes have on pensions and IHT? How are platforms rising to these challenges? Explore these questions and more in the video hosted by Fidelity Adviser Solutions' Paul Squirrell, Head of Retirement and Savings Development, and with insight from and Laura Whetstone, Director at Lathe & Co Wealth Advisers and John Hale, Senior Platform Consultant, Fidelity Adviser Solutions.
Access more on retirement solutions from Fidelity here.
Driven by regulatory reform, demographic changes and evolving client expectations, there has been a significant shift in the complexity of financial advice for both advisers and their providers. As a result, the advisor’s role has become more critical than ever as they face market volatility, ongoing regulatory and tax changes, and the necessity of tailoring advice to the individual’s needs. So how can advisers best approach some key questions they are faced with today? - When does retirement planning typically begin? - What are the main challenges as a client approaches retirement? - Why is cash flow forecasting so important? - What impact will policy changes have on pensions and IHT? - How are platforms rising to these challenges? Explore these questions and more in the video hosted by Fidelity Adviser Solutions' Paul Squirrell, Head of Retirement and Savings Development, and with insight from and Laura Whetstone, Director at Lathe & Co Wealth Advisers and John Hale, Senior Platform Consultant, Fidelity Adviser Solutions.
The 4% rule, developed in the 1990s by William Bengen, suggests a 4% annual withdrawal from retirement savings could last a typical 30-year retirement. But today’s retirees are living longer and have vastly different lifestyles to their ‘90s counterparts. Such differing individual circumstances mean a one-size-fits-all approach is unlikely to deliver the best outcomes in 2025 according to Paul Squirrell, Head of Retirement and Savings Development at Fidelity Adviser Solutions.
“The regulator suggests the starting point for decumulation is to understand an expenditure analysis for the client – assessing their current and future income needs,” explains Squirrell, adding that a blanket 4% rule ignores individualised client factors and is akin to “putting the cart before the horse.” The original rule was based on a 50:50 balanced portfolio of US stocks and US government bonds, which is overly simplistic for today’s clients and markets. “It’s a mathematical equation,” he adds, noting it may not account for inflation, tax, investment charges and more. “Individuals’ income and capital needs will be very different. Should somebody aged 55 and at low risk and somebody at 65 years of age and higher risk use the same percentage withdrawal strategy? Absolutely not.”
One risk of fixed withdrawal strategies is sequence-of-returns risk – the impact of poor market performance early in retirement. Squirrell stresses that retirees can no longer replace lost income through work. To address this, clients should consider reserving assets for short-term spending needs. “If I’ve got an idea of what sort of capital I’m going to need for expenditure, then I can start thinking about reserves,” he explains. Holding sufficient cash or low-risk investments can help clients ride out market volatility without having to sell down core assets at depressed values. This preserves portfolio longevity and avoids locking in losses during downturns.
Managing sequence-of-returns risk
‘Catch-all’ figure issues
Balancing spending and saving in retirement
“There’s a lot of psychology that goes around entering into retirement,” continues Squirrell. “One of the hardest things is talking to people, who have been savers all of their life, into becoming spenders. “When you stop work, or as you phase out of work, allowances may become available that were not available while you’re working such as the savings allowances.” He advises designing portfolios that take advantage of tax wrappers and exemptions. “Making sure that your savings portfolio is designed so anything that’s outside what I would call tax efficient wrap, so anything beyond ISAs and pension, you’re looking to utilise your allowances such as savings allowances, such as the dividend allowance, such as the capital gains annual exemption allowance.”
Strategies for non-linear retirements
“There has to be some flexibility,” says Squirrell. “Flexibility in terms of what can be done with the investments but also in terms of what can be done in terms of drawing income.” “For example, if I want to give up work at 60, my state pension does not kick in for seven years – that in itself is a non-linear approach.” In such cases, he suggests clients may need to draw more income early on and adjust later when other income sources begin. Rather than drawing taxable pension income immediately – which can trigger the Money Purchase Annual Allowance (MPAA) and restrict future contributions – he suggests retirees may want to access the tax-free elements of the pension, “whilst allowing the rest to continue to grow and not preventing further contribution.” Blended solutions offer another level of adaptability. “If I did buy an annuity within a drawdown arrangement, then I’d have the ability to flex the income and deal with the taxation,” he explains. “The one thing to not dismiss is the power of blending the two – blending guarantees with the flexibility.” “A high percentage of people want guarantees of income but almost the same percentage of people want flexibility. It doesn’t have to be binary.”
Using blended income sources
Squirrell highlights the value of accessing different types of assets to meet shifting income needs. “Having different options in terms of meeting your income needs is quite important – cash in the bank, ISAs, investment accounts,” he says. Utilising non-pension assets can help manage tax efficiently while maintaining flexibility. Investment bonds or general investment accounts may be suitable in the early years of retirement, particularly if phased alongside pension drawdown. To reflect changing retirement journeys, there are also new innovative investment strategies available in the market, such as the Standard Life Smoothed Return Pension Fund and the Standard Life Guaranteed Lifetime Income plan. Options such as these are designed to provide less short-term volatility while investing and a regular guaranteed retirement income for life but at the same time offering greater flexibility. The 4% rule remains a useful reference point but individual needs, market dynamics, and evolving retirement behaviours demand a more personalised, flexible approach.
“There has to be some flexibility in terms of what can be done with the investments but also in terms of what can be done in terms of drawing income”
“When you stop work, or as you phase out of work, allowances may become available that were not available while you’re working such as the savings allowances”
Read more from Fidelity on creating retirement income for your clients.
