Effective retirement planning a key challenge for the industry


Specialist investment research house Lonsec says advisers and investment managers need to review existing attitudes to retirement planning if they are to effectively meet the financial needs of the steadily ageing cohort of baby boomers.

This was the message conveyed to the more than 500 Lonsec subscribers attending the recent Lonsec Adviser Roadshow held in Perth, Adelaide, Brisbane, Sydney and Melbourne.
Lonsec continues to operate with the largest retail research team in the Australian market, with more than 35 investment research professionals across managed funds, specialist products and investment consulting, Lonsec CEO, Amanda Gillespie, told attendees.

New appointments to the research team reinforce Lonsec’s commitment to quality research, she said.

Simone Gavin has joined Lonsec as a Senior Investment Analyst and is involved in the review of funds across all sectors, with primary focus in Australian equities, global equities, and global emerging markets. Simone has 13 years’ experience in financial services, including more than four years with Standard and Poor’s managed funds research team.

Nicholas Thomas has also joined Lonsec as a Senior Investment Analyst, and will be responsible for undertaking managed funds research, with a focus on equity sectors. With 13 years investment experience, Nicholas was most recently a Senior Research Analyst at Russell Investments, where he was responsible for researching Australian and Asian equity funds.

Edward Rickard and James Kirk have joined Lonsec as graduate investment analysts.

While research remains Lonsec’s core focus, Ms Gillespie said that Lonsec had responded to adviser needs in an evolving financial services environment, and augmented its core research with a number of strategic non-funds research activities. These include the creation of a new research pillar – Strategic Research, a retirement solutions service from Lonsec’s Investment Consulting team, the launch of an expanded ETF research suite, the transition to specialist data and analytical tools provider Financial Express and the launch of the Lonsec super comparator tool.

“The financial services environment is one of change. We are experiencing continual regulatory change, massive demographic shifts and a rapid pace of technological change that is impacting the way advice is delivered. Lonsec aims to provide advisers with the research and the tools they need to meet the needs of the end investor in this changing environment.”

The retirement income pressures created by the ageing baby boomers, and the significant opportunity it presents to advisers who rise to the challenge, was highlighted at the Roadshow by Wade Matterson, Practice Manager at Milliman.

He said existing analytical approaches are overly simplistic, do not measure risk adequately and have the potential to draw incorrect conclusions. To be effective, he said, the adviser toolkit needs to include the concept of ‘risk buckets’ in its framework.

Jeremy Pree, Lonsec General Manager Business Development, posed the question: Is an average balance of $400,000 enough? Mr Pree’s presentation reinforced that retirement strategies are not a ‘one size fits all’ solution.

While income is a key requirement in retirement, he said many retirees will still require a growth option to ensure a retirement income to sustain them through longer life expectancies. He outlined a number of listed investment options that can provide income solutions as well as the potential for capital growth.
The need for an advice-driven solution rather than a product-led solution is vital in an industry anchored to the accumulation way of thinking about the world, according to Lukasz de Pourbaix, Lonsec’s Head of Investment Consulting. Investor goals and risk tolerance change in retirement, and retirement strategies have to meet these evolving needs.

To manage investor expectations, the current disconnect between investor goals and risk profiling needs to be bridged. A goals-based approach, along with clearer measurement around the likelihood of achieving objectives, can assist in managing client expectations and personalising the investment strategy to client goals.

Later this year, Lonsec will be coming out with more material to assist advisers in implementing a goals-based approach for retiree clients.

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