Planners evolve in retirement advice delivery

24-Mar-2016

By Kristen Crawford

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Financial planners are becoming more sophisticated in their product advice to retirees, according to industry research from Investment Trends.

In its fifth year, Investment Trends’ “2015 Retirement Planner Report”, based on a survey of 591 financial planners and conducted in September and October 2015, revealed a number of trends in the space.

Suppressed cash rates and heightened market volatility had been driving financial planners to seek new solutions for their retiree clients and over the past 12 months, financial planners placed only 16 per cent of their new retiree client flows into cash and term deposits, down from 22 per cent in the group’s previous study.

“To continue being seen as adding value to their pre-retiree and retiree clients, especially in this high-volatility and low interest rate environment, financial planners are reducing their flows into safe-haven investments such as cash and term deposits in favour of more sophisticated products,” Investment Trends head of research for wealth management Recep Peker said.

“Annuities, diversified funds and income funds will continue to be the winners as planners seek higher-yielding, diversified investments.”

From the study, two products stood out as having future growth potential among the older client segments: annuities and goals or outcomes-based funds.

The number of planners who advised retirees to use annuities continued to grow, the report found.

Of the respondents, 41 per cent said they recommended annuities in the 12 months to December 2015, up from 38 per cent in 2014 and 32 per cent in 2013.

Annuities’ rise in popularity was due in no small part to Challenger’s efforts in raising awareness and education of the product, Peker pointed out.

“Planners are becoming proficient in recommending annuities, with more finding them easy to understand and use,” he said.

“Those who explain annuities to clients typically spend only 14 minutes doing so, versus 17 minutes taken to explain managed funds.

“Client awareness of the Challenger annuities brand has also contributed significantly to planners’ ability to recommend annuities, helping to grow the market.”

Although planners generally rated their platforms exceptionally well overall, their evolving needs meant a gap had emerged and they were increasingly seeking the next generation of retirement modelling tools and calculators, he said.

The majority of planners, at 84 per cent, said they were seeking assistance from product providers to better service their pre-retiree and retiree clients and most commonly were in pursuit of online tools and calculators, ahead of education or awareness initiatives and improved products.

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