Joanne Earl

An Australian first study from Macquarie University’s School of Psychological Sciences has revealed mental health, enjoyment, and financial security are key benefits to incorporating guaranteed income and annuities into retirement plans.

Partnering with Challenger, Australia’s largest retirement income provider, the study focused on ~1000 Challenger customers aged over 60.

Two-thirds of respondents proactively chose to enter retirement (either partially or fully), with ‘financial stability’, ‘enjoying retirement while health allowed’, and ‘eligibility to access super’ the lead factors in decision making.

The study’s findings contrasted with the broader Australian population, where reaching retirement age; sickness, injury or disability; retrenchment, dismissal, or unemployment; or access to super are the main retirement triggers^[1]. Interestingly, retirement attitudes were not significantly impacted by gender or time in retirement.

Proactive retirement: secret sauce to retirement bliss

Commenting on the study, lead researcher Professor Joanne Earl, said timing of when to retire, planning, and choice were revealed as crucial for retirement enjoyment and wellbeing. “Proactively choosing how and when to retire may be the secret ingredients to wellbeing in our golden years,” Professor Earl said. “The findings demonstrate that feeling empowered to choose when and how you step into this next phase of life results in a healthier transition and greater retirement happiness, retirement adjustment, and satisfaction. “Pleasingly, research respondents are choosing to enter this next stage of life while their health allows them to truly enjoy themselves and explore their passions and purpose. Of those surveyed, 22% noted the choice to focus on what you want to do rather than what you have to do was the top retirement benefit. This was closely followed by enjoying freedom and flexibility to be spontaneous (20%), family time (17%), and travel (15%).

“Financial security came through strongly as one of the key enablers for Challenger customers to have the peace of mind to take this step with confidence.”

Respondents who proactively chose to retire were found to have significantly fewer worries (51%) compared to those who retired out of necessity (32%). Having the financial security to optimise choice was also cited as potentially having longer-term benefits.

Purpose pivotal to retirement wellbeing

Having a purpose proved to be another critical component to life satisfaction in retirement, with more than 50 percent of respondents noting ‘enjoyment’ as their key purpose in retirement, followed by ‘keeping well’ (22%).

When compared to Challenger’s inaugural Retirement Happiness Index Research launched in April 2024, retirees with a guaranteed income were found to outperform on every happiness metric. Most notably they reported higher levels of financial security (72% v 56%), mental health (85% v 78%), and enjoying good social connections (79% v 70%)^[2]. Challenger Chief Executive, Customer, Mandy Mannix said this Australian first study allowed retirees, and the industry, to have a greater understanding of the role and importance of having a guaranteed income stream in retirement.

“For the first time, we are hearing from real customers about the power of guaranteed regular income. The data clearly indicates that annuities, or some element of guaranteed regular income in retirement can be a gamechanger, and we are seeing this in our broader customer base and increase in annuity take-up,” Ms Mannix said. “

When you know a portion of your savings is guaranteed to last a lifetime, it brings an unparalleled sense of security. In fact, 60% of our customers surveyed said they lived comfortably, and majority did not think they would outlive their savings, regardless of household income. This confidence in receiving a stable “pay check” for life allows you to focus on what truly makes you happy.”

With 10 percent of Australia’s population set to retire in the coming decade, guarantee and longevity of retirement income has become a key priority for the government and industry.

Read the study.

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Notes:
[1] ABS 2022-23, https://www.abs.gov.au/statistics/labour/employment-and-unemployment/retirement-andretirement-intentions-australia/latest-release
[2] YouGov research, 2024, Happiness Index, Challenger

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Joanne Earl

Following the successful completion of a holistic retirement planning pilot study in August 2021, Macquarie University, in collaboration with Allianz Retire+, calls for financial advisers to join the Australian Research Council linkage project, as it’s cleared for a national roll out.

The landmark project will commence nationwide in March 2022 and combines expertise  from Macquarie University and Allianz Retire+ with academic affiliates from UNSW and the University of Western Australia. The longitudinal study will examine how a range of inputs to pre-retirement planning – spanning career, health and financial guidance – may impact retirement outcomes for everyday Australians.

Preliminary results from the South Australian pilot study, undertaken in late 2021, provide promising results in how post-work planning has benefits for retirement preparation:

• after completing the intensive three-module course – a mix of online and one-to-one advice activities – participants on average revised their expected retirement ages and reported higher confidence in achieving the intended target date
• higher confidence about retirement overall
• boosted financial literacy knowledge
• increased likelihood of consulting a financial adviser.

While seeking to build more detailed evidence on holistic retirement advice, the study also aims to deliver innovative retirement planning training for financial advisers.

In exchange for a significant number of CPD points, the project team now seeks expressions of interest from registered financial advisers with experience in dealing with retirement planning-related issues to provide general financial advice sessions.

Project lead and Macquarie University Professor Joanne Earl, a noted expert on the psychology of ageing and retirement, said: “Our Adviser partners are critical to this project as their feedback will help us translate the theory of the program into a workable advice solution. They’ll have the opportunity to be at the forefront of something really progressive”.

“Having enjoyed the process, a number of our advisers in the pilot seem to have got a lot out of the experience and wish to carry over into our main study, and we are incredibly grateful for their continued support” she said.

In addition to CPD points, planners will also gain training and insight into the broader multi-disciplinary approach that supports the holistic advice process.

Simon Aboud, Allianz Retire+ Chief Product and Marketing Officer, said the pilot displayed promise for the main study, at a time when advice adoption levels in the pre-retirement segment remain worryingly low:

“We know from recent Allianz Retire+ data that only 1 in 6 people approaching retirement are engaging with any financial advice. We view the general uptick in willingness to seek advice following the pilot as a highly beneficial outcome for the participants” commented Aboud.

“This study is revolutionary in its potential and the model, if proven effective, could positively impact people’s choices and retirement confidence for generations to come”.

Financial advisers wanting to take part in the upcoming Macquarie University/Allianz Retire+ study can contact: ThinkAhead@mq.edu.au

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Joanne Earl

Allianz Retire+ has announced a research partnership in conjunction with Macquarie University, focused on better understanding the impact of a range of inputs to pre-retirement advice in order to ensure everyday Australians get the retirement they deserve.

The three-year research project – ‘Improving Retirement Planning, Decision Making and Adjustment: Towards a Holistic Model of Advice’  – will be led by Associate Professor Joanne Earl of Macquarie University in collaboration with Allianz Retire+, and will work with Australian retirees and financial advisers to measure adjustment or ‘happiness’ in retirement as a result of receiving holistic advice.

The study extends earlier research conducted by Associate Professor Earl (published in the Journal of Vocational Behaviour) that looked at the importance of resources or ‘buckets’ – health, wealth, social, cognition, emotional, and motivational factors – in helping to understand what keeps people well in retirement.

In the latest iteration of her research Associate Professor Earl places greater significance on the timing and conditions of work exit. The project team plans to practically apply the resources model, engaging clients in training and discussions about planning for retirement, specifically looking to incorporate career, finance and health advice when thinking about retirement.

“We think the conditions of exit are a really critical part of the retirement planning decision process. We know that there were 177,500 people who said they were retired in phase one who were back out looking for work in phase two according to successive waves of the Multipurpose Household survey. The primary two reasons for why this was happening was because they were worried about money and they were bored.  That says to me, the question about timing is not as self-evident as you might think,” stated Associate Professor Earl.

This new project will track Australians transitioning to retirement, as they are guided to plan their exit or reconceptualise their participation in the workforce, allowing them to revise their plans with each new input of advice.  It will research the impact of active planning across different buckets when transitioning to retirement.

“Rather than just financial advice, early on in the process, we’ll be introducing people to careers counselling or careers advice, as well as a medical assessment to challenge their thinking about health. Helping people to go through that decision-making process before they start talking to a financial adviser

will give people a lot more information to work with. Those people that have been through this process should make better-qualified decisions than those people that are in a control group,” Associate Professor Earl said.

The project will also look to assess the added value of individual advice and will test the efficacy of more flexible models of delivery such as online and robo-advice compared to the traditional face to face, seeking to determine how these elements may work together to assist people in transitioning to retirement.

Jacqui Lennon, Head of Product and Customer Experience, Allianz Retire+ believes this research has the potential to redefine the way advice is delivered to retirees: “Our partnership with Associate Professor Earl and Macquarie is a hugely exciting prospect for our business. This research has the potential to rescript how we approach retirement advice, so as an industry, we are creating confidence for Australians in retirement.  We know from speaking with retirees that when it comes to making decisions about their retirement, it’s never purely a financial conversation.  It’s emotional, philosophical and financial. This research should define exactly what trusted advice looks like and will provide insight into what role advisers can play in setting up people for a happy retirement. Post Royal Commission, many advisers are struggling to define their value proposition, and with 1,000 Australians retiring a day, there has never been a more pressing need to undertake this research”.

If the research is successful, then it should see a difference in retirement adjustment for those that have been through the process compared to the control group.  It is expected that participants will have made better decisions, having taken into account different scenarios increasing their confidence in the choices they have made. Overall their retirement will have met or surpassed their expectation.

Associate Professor Earl explains: “After going through the process of reviewing their health, career and financial goals, we should expect retirees will be able to make more informed choices and will have revised their plans as a result. This should lead to them increasing their adjustment in retirement and overall see them having happier retirements.”

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Jenny Brown

I’d love to see you and welcome you to fascinating Canberra, our nation’s capital for the AFA 2016 National Adviser Conference, the jewel in the crown for the AFA – October 5-7, 2016.

As a practising adviser, this Conference is always the highlight of my year and I look forward to it as a chance to hear, watch and learn from the best, as well as to catch up with colleagues and friends.

This year’s conference is about ‘Adaptive Change – taking advice beyond the horizon’ and as advisers we need to accept the challenge to think differently, to evolve and to be better prepared for the opportunities and challenges that lie ahead.

The AFA has been working tirelessly to be more effective in delivering value for members by improving the positioning and relevance of our association, the results of which will be on show at the conference – whether it has been raising adviser professionalism, stronger relationships and influence with Government, an industry-leading professional education pathway, or the building of a voice to consumers through Your Best Interests – the AFA has laid a strong platform for the future.

As preparations for the 2016 AFA National Adviser Conference approach the final stages, we are absolutely thrilled to be able to bring some amazing keynote speakers to the stage including;

• The Hon John Howard OA AC – Political Leadership
• Dr Ric Charlesworth – High-Performance Leadership
• Dr Adam Fraser – Peak Performance Without the Collateral Damage
• Tony Bongiorno – MDRT Learnings from Around the World
• Dr Jason Mitchell – Academic Leadership
• Brian Freeman – Humanitarian Leadership
• Dr Jason Mitchell, Professor of Psychology Harvard University
• Graham Rich, PortfolioConstruction Forum
• Stephen Halmarick, Chief Economist CFS Global Asset Management
• Joanne Earl, Associate Professor Flinders Business School
• David Reed, Adviser of the Year
• Paul Kearney, Practice of the Year
• Over 30 AFA Members sharing their best practice
• Brad Fox, Scott Moffit, Richard Klipin, Terry Rhodes, Dave Slovinec – Growing the demand for insurance

We have 3 amazing masterclasses from our communities of practice to explore more opportunities;

• Inspire with Margie Warrell
• Genxt with Dr Ric Charlesworth
• Leaders Forum – The AFA community of ideas and sharing

These world class speakers are augmented by a plethora of awesome advisers from our AFA community who are all willing to share the insights, skills and knowledge that they have applied to their own advice practices to ensure they are future proofed and ready to thrive as financial advice is taken beyond the horizon.

The conference committee has listened to members’ feedback and worked hard to build a program that blends exceptional technical knowledge with practical implementation based upon the AFA adviser learning pillars:

• Business Performance
• Adviser Performance
• Advice Strategies
• Professionalism and Learning

Our goal is to provide you with inspiration and load you up with the best ideas, strategies and the tools to implement those ideas to ensure that you can deliver exceptional service for your clients, helping them understand your advice strategies and how you can work with them to build and lead better lives. After all, everything we do is to put our clients and their families into a better situation, to be their trusted adviser.

Also, back by popular demand are our ‘Meet the Professionals’ and ‘Meet the Innovators’ round-table discussions.

With more advisers than ever now choosing to belong to the AFA, we are proud that there is more adviser input to this year’s conference agenda. Hearing from our peers we have always found to be incredibly worthwhile, and remembering that the smartest person in the room may not be the person on stage, it could be the person sitting next to you, or at lunch, or at the dinner function, you will hear a multitude of stories or how advisers solve our client’s problems, how they refine their skills, and we can even learn from their mistakes. Advisers have a unique perspective on the operation of the financial advice profession and all of this knowledge and ongoing learning can be captured and shared for the benefit of all.

So my question to you is, “What is holding you back from taking the next step forward in how you provide advice, how you improve your client experience and client outcomes, and your own profitability?” My bet is the answers can be found at the AFA National Adviser Conference.

But have you booked yet? The answers won’t come to you; you need to come to Conference to get them. In the absence of taking action, nothing will change, so click on to www.afaconference.com.au and register.

Whether you are a new adviser, a practice owner or an employed adviser, this will be a conference to help equip you to serve your client’s needs better, to prepare you for the opportunities ahead and help you take your financial advice beyond the horizon.

We’re looking forward to seeing you in Canberra.

Jenny Brown, Conference Co-Chair

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