Baby boomers a 'boon' for advisers

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The wave of baby boomers soon to seek advice on superannuation withdrawal will prove a “boon” for financial advisers, a new report from research firm IbisWorld has found.

Baby boomers – those born between 1946 and 1964 – currently make up about 22% of Australia’s population. Retirees aged over 45 are estimated to receive 15% of their incomes from superannuation, with investments accounting for 14% of income and government pensions accounting for 66%.

IbisWorld predicts as more baby boomers approach retirement age, superannuation and the changing financial services landscape will become “hot topics” and “a boon” for those providing financial advice.

“Our ageing population will drive demand for financial services as superannuation funds become available. Baby boomers will also seek legal and tax advice to minimise superannuation tax, maximise pension incomes and prepare wills,” said IbisWorld Australia general manager Karen Dobie.

Over the five years through 2013 to 2014, the financial planning and investment advice industry is forecast to rise annually by 2.6% to total $4.4 billion, said IbisWorld. The researcher predicts the industry will grow 4% annually over the next five years as more superannuation is withdrawn for investment.

But Association of Superannuation Funds Australia research director Ross Clare put the brakes on somewhat.
“It’s never easy to do projections. The growth of retirees could add demand but there are other factors advisers have to think of, like change to remuneration under FOFA, such as grandfathering, fee for service and no conflicted remuneration,” he told Wealth Professional.

“There’s an aging population certainly, but there are other factors which impact advice too.

“The feedback from the industry is there are a number of changes which are impacting business. Things like efficiencies; whether the planner can provide advice in a time and cost effective way, and whether there is support for the financial planner to do that.”

While seeking out financial advice is often triggered by life events like retirement, full services can be relatively expensive – so it is not just the amount of people retiring, it is whether they have enough money to warrant paying for financial advice too, Clare noted.

If someone was deciding to train as a financial planner on the basis of this information it would be important to look at specific market areas to find demand, he said.