Over 55s now account for four out of five dollars under advice


Key findings of the Investment Trends December 2013 Retirement Planner Report:

  • Retirees and pre-retirees now account for 82% of planner funds under advice
  • North and Asgard Infinity eWrap lead the market in growing their share of the increasingly important retiree and pre-retiree segments
  • Annuities are increasingly popular among financial planners
Over 55s now account for four out of five dollars under advice.

Over 55s now account for four out of five dollars under advice.

An aging population and generational wealth differences have made retirees and pre-retirees the pre-eminent markets for financial planners — and they are set to become even more important in the future, according to a recently released report from leading wealth researcher Investment Trends.

The December 2013 Retirement Planner Report is a comprehensive study of Australian financial planners and advice services for retirees and pre-retirees, together with the evolving attitudes and preferences of investors aged 40 and up. Based on an in-depth survey of 798 financial planners between October and December 2013, the report reveals that retirees and pre-retirees now make up 66% of financial planning clients and account for 82% of planner funds under advice.

With the number of retirees and pre-retirees set to grow from 6.2m to 7.9m over the next 10 years, according to the ABS, their economic importance will continue to increase.

“In 2013, for the first time, retirees held half of all planner funds under advice, up from 46% just 12 months earlier,” said Investment Trends Senior Analyst Recep Peker. “And 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.”

North and eWRAP are gaining market share

The growing importance of the retiree and pre-retiree segments make them a key battleground for platform providers seeking to grow market share.

Currently BT Wrap and CFS FirstChoice are the most widely used platforms for both segments, with a total primary market share of 15% each, reflecting their overall market dominance across all age groups.

North and Asgard Infinity eWRAP have been winning a higher number of pre-retiree and retiree clients when compared to their overall market share. In the survey, North stood out for its income guaranteed and capital protected products, together with a wide range of investment options, while eWRAP won planners over with pension payment flexibility, low administration fees and easy online transfers from super to pension products.

“Planners are very demanding when it comes to selecting a platform for their retiree and pre-retiree clients,” says Peker.  “As well as low fees, strong support services and high-quality reporting, they are increasingly looking for well developed transition to retirement capabilities and a wider range of investment options — especially income guaranteed products.”

“We’re also seeing planners taking a more hands-on approach to client education, preferring online calculators and scenario tools to static educational collateral.”

Annuities are increasingly popular

Thirty-two per cent of planners say they recommended annuities in the 12 months to December 2013, up from 26% in 2012 — and that figure is set to rise further, with 37% saying they plan to use annuities in 2014.

“The proportion of planners recommending annuities has increased, despite the current low interest rate environment,” says Peker. “There are strong indications that planners would make even greater use of annuities if some key obstacles were removed.”

Forty-one 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 include the ability to invest without locking in current interest rates, age pension friendly products and more product flexibility.

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