Retirees make up majority of FUA: report

Economic importance of clients to rise.


By Krystine Lumanta

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Retirees and pre-retirees make up 66 per cent of financial planning clients and account for 82 per cent of planner funds under advice, according to the latest findings from Investments Trends.

The “December 2013 Retirement Planner Report” examined Australian financial planners and the evolution of their services for retirees and pre-retirees.

With the number of retirees and pre-retirees set to grow from 6.2 million to 7.9 million in the next 10 years, their economic importance would continue to increase, Investment Trends senior analyst Recep Peker said yesterday.

“In 2013, for the first time retirees held half of all planner funds under advice, up from 46 per cent just 12 months earlier,” Peker said.

“That’s just the tip of the iceberg – with the first wave of baby boomers only just reaching retirement age, retirees and pre-retirees will continue to demand higher levels of planning support for decades to come.”

The report found 32 per cent of planners said they recommended annuities in the 12 months to December 2013, up from 26 per cent in 2012.

The figure was set to rise further, with 37 per cent of planners stating they planned to use annuities in 2014.

“The proportion of planners recommending annuities has increased despite the current low interest rate environment,” Peker said.

“There are strong indications that planners would make even greater use of annuities if some key obstacles were removed.”

The research also revealed 41 per cent of planners said a higher rate of return would lead them to recommend annuities more often.

Other changes that would encourage greater use included the ability to invest without locking in current interest rates, age pension-friendly products and more product flexibility.

The report was based on a survey of 798 financial planners between October and December 2013.

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