SARAH’S STORY

For advisers onlyThis is for financial adviser use only and shouldn’t be relied upon by any

other person.

Sarah’s 55 and married with three children.She’d like to access her tax-free cash so she

can buy a motorhome.

Here’s how our financial planning toolhelped to create a financial plan

to meet her needs.

2

ABOUT SARAH

• Sarah’s a joiner. She’s worked as a sole trader her whole life and earns approximately £27,000 a year. She’s smoked all her life and is a regular social drinker, so she’d like to plan to age 85.

• She’s built up savings worth £220,000. She’ll continue to save 10% of her salary into her pension until she retires at 61 and will receive the full State Pension when she reaches age 67.

• Sarah would like to have a yearly retirement income of £14,000, but she needs £20,000 so she can buy a motorhome to enjoy holidays with her husband, Martin.

• Her children have left home and are financially independent, so she doesn’t plan to leave any money behind. She’d like to leave her home as inheritance, but she’s prepared to use this to fund any shortfall in her retirement income.

It’s also important to Sarah that:

• She can spend more while she’s younger and less when she’s older. • She can flexibly access her savings from age 55, so she can take the income she needs, when she

needs it.• She has a financial plan in place to give her peace of mind about her retirement goals. • Her investments benefit from regular reviews, hands-on supervision and ongoing fine-tuning.

The recommended solution

Based on Sarah’s needs, her financial adviser recommends that she takes out an Income Release plan with Royal London.

Sarah’s got a cautious attitude to risk so her adviser has recommended that she invests in Royal London’s Governed Portfolio 1 (GP 1).

What investment growth is needed?

5.3%

This is the target growth rate needed

each year to help you meet your needs,

allowing for charges and inflation.

£14,000

This is the yearly income you'll

start taking from age 61.

How much have you saved?

£190,000

You’ve saved £190,000 so far and

you don't plan to save any more.

Sarah Sample Financial plan

This plan is designed to help you achieve your financial goals. It's based on your current needs and circumstances and contains important information about your savings.

Age to plan to Current age

This financial plan covers the next 30 years.

22 May 2019

55 85

How much income do you plan to take out?

Sarah Sample financial plan 1234567

All the figures shown in this financial plan account for inflation.

Sarah’s financial plan

After discussing her current needs and circumstances, Sarah’s adviser uses our financial planning tool to create a financial plan that will give her a full picture of her different sources of income and how her spending needs could change over time.

Sarah will meet up with her adviser regularly to review her financial plan, to make sure it continues to meet her needs. In return for the services that she receives from her financial adviser, Sarah’s agreed that an initial adviser charge of £500 and an ongoing adviser charge of 0.5% will be deducted from her plan.

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HOW MUCH INCOME DOES SARAH PLAN TO TAKE OUT?

The chart below shows Sarah’s sources of income and how the money she takes out could change over time.

All the the figures shown are in today’s money. To find out more about the assumptions our financial planning tool uses, visit our website at adviser.royallondon.com/fpt

4

HOW COULD SARAH’S SAVINGS PERFORM?

The chart below shows how Sarah’s savings could perform in different market conditions, over the next 30 years.

Poor market

Sarah’s plan wouldn’t meet her needs.

Her savings would run out at age 80.

3 times out of 4, our financial planning tool expects markets to perform better than this.

Average market

Sarah could achieve her target income and have £12,700 left when she reaches age 85.

2 times out of 4, our financial planning tool expects markets to perform better than this.

Strong market

Sarah could achieve her target income and have £65,800 left when she reaches age 85.

1 time out of 4, our financial planning tool expects markets to perform better than this.

All the the figures shown are in today’s money. To find out more about the assumptions our financial planning tool uses, visit our website at adviser.royallondon.com/fpt

5

HOW ACHIEVABLE IS SARAH’S FINANCIAL PLAN?

When investing in the stock market, there are never guarantees.

To assess the likelihood of Sarah achieving her financial plan, our financial planning tool uses a sophisticated economic forecast, provided by Moody’s Analytics.

This stress tests Sarah’s plan by looking at 1,000 different ways the economy could perform over the next 30 years.

58.8%Sarah’s forecast resultsWhile this isn’t guaranteed, it means that 588 times out of 1,000, our financial planning tool expects Sarah to achieve her financial plan – so her savings could provide the income she needs until age 85.

How could Sarah improve her forecast result?

Save more for her futureAlthough it depends on Sarah’s individual circumstances and may change, this means that for every 80p she saves into her pension, the taxman will make it up to £1.

Retire later Sarah might want to retire later or work part-time to help her savings last longer.

Take a lower incomeSarah might want to take a smaller income from her pension each year to help protect her income in later years.

Spread out her tax-free cashTaking her tax-free cash as a series of smaller payments could help Sarah to reduce the amount of tax she pays.

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WHY ROYAL LONDON?

Some of the reasons why Sarah’s adviser has recommended Royal London are set out below:

READY-MADE INVESTMENTS We have a wide range of investment options, which can take account of Sarah’s attitude to risk and plans for the future.

OUTSTANDING SERVICE We’ve consistently won five stars for our service, so you can count on us to deliver a great service when it matters.

CUSTOMER ENGAGEMENT We’ll help Sarah keep an eye on her savings and our regular updates will support her ongoing conversations with her adviser.

FLEXIBLE RETIREMENT OPTIONS Our personal pension lets Sarah take full advantage of the pension freedoms, meaning she can access her money in a way that suits her.

SHARE IN OUR PROFITS When we do well, we’ll aim to boost Sarah’s savings by adding a share of our profits to her plan each year – we call it ProfitShare.

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THE IMPORTANCE OF ONGOING REVIEWS

To make sure Sarah’s financial plan continues to meet her needs, she’ll meet her adviser regularly. As part of this, they’ll consider:

• Changes to Sarah’s financial goals or circumstances.• How Sarah’s savings have performed.• Changes in market conditions.• Changes in legislation.• Whether any new products have become available.• Whether flexible access is still a suitable product for her.

Sarah will receive a yearly statement from Royal London to show her the value of her plan and the investment growth she’s had. Sarah’s adviser can then use our client review service as part of their regular review process to start a deeper discussion.

BENEFITS OF OUR FINANCIAL PLANNING TOOL FOR YOU AND YOUR CLIENTS

• Client understanding Give your clients a full picture of their different sources of income and how their spending needs could change over time.

• Easy to use You only need to provide a few pieces of information to use the financial planning tool, you can save and compare several models and we’ll default some of the information for you, saving you time and effort.

• Professional client report You can create client reports to help you demonstrate the work you’ve done and the expertise you’re providing.

• Sophisticated economic model Our financial planning tool is powered by a sophisticated economic model, provided by Moody’s Analytics, who are known experts in this field.

• No extra charge We won’t charge you to use our tool, so you can provide a cost-effective planning service to your clients.

January 2020 L 2T PD 0008

Royal London1 Thistle Street, Edinburgh EH2 1DG

royallondon.com

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For more information about how we can support you and your client through the

retirement planning journey, speak to your usual Royal London contact or visit

adviser.royallondon.com/fpt