7 keys to survival in 2013

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As boomers enter retirement, their needs and objectives inherently change, as do the risks they face. The overlay specific to the boomers however, is that their purchasing behaviour, the level of engagement with their finances and access to information, is also changing. This adds up to mounting expectations for the performance of the advice process and products. And chances are, if you’re an advice business or a fund manager, you aren’t ready…

This white paper contends that the current financial advice model serving retirees in Australia is suboptimal for their needs. The suite of readily-available products, tailored specifically for retirees, is too limited. Strong catalysts and structural trends have now emerged that will fundamentally alter the provision of advice (and products) to this sector. Future success in financial advice and funds management will hinge on genuinely responding to the real needs of retirees – tapping the boomer zeitgeist!

While the industry is busy identifying the challenges and debating the issues of post-retirement investing, solutions and responses have been thin on the ground. Part of this inertia stems from the (very) inconvenient truth that underfunding is the biggest issue retirees face: “You want me to change my advice process to one where I need to tell most of my clients’ they have to roll back their lifestyles?”

Partly, it stems from the complexity of the task of optimising multiple retirement investment objectives and also from a reluctance to accept the need for change:

“There have always been retirees and we’ve always sold product to them/advised them and we’ve built a very successful business selling modified accumulator style solutions”.

Regulatory, consumer and technological changes would alone likely force a change of approach, but add in the sheer scale of the demographic effect of the aging boomer population and the need for change becomes a fait accompli. The size of the boomer pool by number, and therefore its aggregate wealth, has meant that they have shaped entire industries and will continue to do so.

It’s inevitable that the needs of boomers in retirement will have to be met by our industry. But to ‘follow the money’ means significant business, product and advice process reengineering must occur. It will be no small task, but the rewards for first movers who offer relevant, strategically-driven and robustly-tested advice solutions (and products) to retirees will be great. Who will be first to grasp the post-retirement advice opportunity?

Australia’s financial advice industry requires carefully considered and robustly-tested independent guidance to navigate the challenges of post-retirement investing. The industry needs to confidently adopt an alternative advice model that is pragmatic and implementable, yet offers clearly better outcomes for retirees.

This inaugural joint White Paper looks to challenge some commonly used approaches to managing portfolios in post-retirement, as well as providing insight into the direction in which we believe the advice process, and the portfolio construction process therein, should be heading.

Further Papers will follow to address specific post-retirement investment issues in detail, offering progress towards timely solutions. We welcome your feedback and look forward to guiding you on this journey.


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