MEDIA RELEASE: Australia has reached a critical juncture where the bulk of superannuation assets sits in the hands of people aged over 50, and traditional portfolio construction approaches need to evolve to meet their financial needs, says Richard Dinham, head of client solutions and retirement at Fidelity International.
To help financial advisers develop investment approaches that meet the specific needs of their retiree clients, Fidelity International has developed a research paper “Building Better Retirement Futures”, in conjunction with the Financial Planning Association of Australia (FPA) and CoreData.
“In Australia, the retiree client group is growing in size and it is essential that financial advisers have the right tools and resources to meet their particular needs.
“As such it is important to understand the motivations and drivers behind the behaviour of retiree clients as they move from accumulation to decumulation.
“The paper outlines some of the key financial issues and considerations specific to retirees and helps advisers design the best strategies for post-retirement decumulation.”
Mr Dinham said the paper is designed to help advisers better understand the strengths and weaknesses of various approaches, and how to use them in their work with clients.
“Financial planners are at the frontline of helping people make the most of their assets and achieve their best possible retirement. However, the strategies that suited clients in accumulation phase may no longer work in retirement, and advisers will need to develop new approaches specifically designed for their needs.
“For instance, the paper outlines the different strategies that advisers can use with their retiree clients such as keeping the same strategy as in accumulation phase; transitioning to a more conservative asset allocation; simple bucketing; more complex bucketing; or income layering. It then looks at the pros and cons of each approach.”
He added that the recent Retirement Income Review identified a number of areas of concern with retirement where financial planners are well-placed to help.
“One issue identified by the Retirement Income Review is that many retirees are unwilling to draw down on their retirement savings.
“Our own research has shown that almost two-thirds of Australians believe they are not prepared for retirement, and many are worried that they are not on track to have enough money for a retirement they can be happy with.
“As a result, there are a number of retirees who are afraid of spending too much in case they run out of money.
“Financial advice is invaluable in helping retirees understand how long their money will last and what steps they can take to minimise the risk of outliving their savings.