Good morning and welcome to your Morning Briefing for Friday 12 April 2024. To get this in your inbox every morning click here.
UK economy grows slightly in February
The UK economy has grown slightly for the second month in a row with gross domestic product (GDP) up just 0.1% in February, the Office for National Statistics (ONS) said.
The ONS said February growth was boosted by production and manufacturing in areas such as the car industry. The latest news has increased hopes that the UK economy is on its way out of recession.
Good and bad practice in the advice space
Of course, the Financial Conduct Authority had to publish the outcomes of its thematic review of retirement income advice the morning after I’d over-indulged at Next Wealth’s post-conference drinks.
The long-awaited document is packed full of examples of both good and bad practice in the advice space. And the regulator makes it clear what it expects from firms.
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Quote Of The Day
Today’s data indicates that the UK’s economic trajectory is on a shallow but steady upward course.
– Jeremy Batstone-Carr, European Strategist, Raymond James Investment Services, comments on ONS data showing that UK GDP grew by 0.1% in February, following previous contractions.
Stat Attack
New research from Standard Life, part of Phoenix Group, reveals that UK adults face a significant shortfall in the amount of pension savings they have at retirement compared to what they wanted to retire on, potentially impacting their retirement lifestyle as a result. It found that
on average, retirees had hoped to build up a pension pot of £250,0001. However, the average amount that they accumulated by retirement was £131,000 – leaving a £119,000 shortfall.
Based on current annuity rates, a pot of £250,000 could lead to an income of £1,007 monthly, or £12,091 a year, assuming a retirement age of 66.
A pot of £131,000 could result in a monthly income of £527 in retirement, or £6,332 yearly – £480 month, or £5,759 a year less.
However, the not insignificant £250,000 pot falls short of a ‘moderate’ standard of living in retirement according to the PLSA, including the State Pension.
Retiree regrets
Retirees also expressed several regrets in relation to their financial preparation for retirement.
Half (50%) wished that they’d thought about their retirement finances at a younger age when they had more time to make changes, 54% wished they saved more and 53% wished they started saving earlier. Other regrets include:
51% wished they had more information about how to plan and prepare for their retirement
42% said they should have sought advice or guidance to plan for their retirement
37% said they should have sought advice or guidance before they accessed their pension savings
Source: Standard Life
In Other News
Finova has launched its newly improved retention portal designed to streamline the mortgage switch journey for existing customers who are approaching the end of their fixed-term deal and are now considering a product switch.
The cloud-based mortgage and savings software provider said the retention portal is outfitted with multiple features to ensure the customer has autonomy over their mortgage switch journey. It is fully functional on all digital devices and enables customers to review their options and conveniently choose the most suitable product for their needs.
Customers also have the ability to self-select a convenient date to switch products and pay any outstanding fees when applicable. In addition, the retention portal offers secure access, multiple layers of data encryption, multi-factor authentication, and regular security audits to create a fully comprehensive and secure solution.
The portal is fully brandable, enabling lenders to customise the portal to match their styling and brand identity. Building on this, it is fully configurable to meet the specific needs of lenders and their customer journeys and can be integrated alongside any existing servicing solution.
Chris Little, chief revenue officer at Finova, said: “As the UK’s leading provider of mortgage and savings software, the finova team is constantly exploring new avenues to refine and streamline our customer service. The launch of our new retention portal solidifies our ongoing commitment to helping lenders better serve their customers and meet their evolving needs.”
From Elsewhere
Global investors pull back from equity funds amid inflation concerns (Reuters)
UK has real concerns about AI risks, says competition regulator (The Guardian)
Government should counter misinformation on TikTok – MPs (BBC)
Did You See?
Inflation’s last mile will be the hardest, according to David Coombs, head of multi-asset investments at Rathbones.
He writes: “It was confirmed in February that the UK fell into recession in the second half of 2023. This wasn’t too much of a surprise, and indeed stocks and bonds didn’t flinch a bit. The contraction in economic growth was very small (0.4% in six months) and the UK still grew 0.1% over the whole year.
“Some people – Bank of England governor Andrew Bailey among them – argue the recession may already be over. Everyone is still laser focused on the likely path of interest rates, both here, in Europe and across the Atlantic.
“The big piece of the puzzle is inflation: will it continue to fall (we think it will), reassuring central banks they can reduce borrowing costs without sparking another flare-up in prices? We’ve always suspected the last mile of getting inflation back to 2% would be the hardest. And it has been so far.”
Read more here.
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