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Greater personalisation in retirement planning and advice could help boost projected annual income for Australian retirees by up to 50%

Wed, 16 Jul 2025 21:20:57 +0000

Rachel White

A new study from Vanguard shows that depending on the complexity of their financial circumstances, Australian retirees could increase their projected annual incomes between 3-51% by incorporating personal and household data into their retirement income strategies, compared to relying on a minimum withdrawal strategy.^[1]^[2]

The study findings have implications for retirement advice. While individuals have access to the full scope of their personal information, they may lack the financial acumen to optimise their retirement income according to their financial circumstances. Professional advisers, however, could significantly increase expected retirement outcomes using a greater extent of additional personal information, given their retirement planning expertise. Superannuation funds can also play a role, particularly for members who cannot or do not want to engage a financial adviser, but they are currently limited in their ability to access and use personal information at scale.

The study, which aimed to quantify the financial impacts of greater use of personal information on retirement outcomes, modelled three retirement income strategies that incorporated different levels of personal and household data:

Minimum withdrawal strategy: Regardless of their personal financial circumstance, a retiree withdraws only the legislated minimum drawdowns from their retirement income account.
Superfund best efforts strategy: Guidance from a hypothetical superannuation fund that has limited visibility of a member’s financial picture and does not accurately factor in information such as partner status, age pension eligibility, or assets held outside superannuation.
Full information strategy: An optimised strategy that incorporates comprehensive individual and household information.

The study found that the more personal and household data that goes into a retirement income strategy, the better the outcomes, highlighting the financial benefits of considering personal information in retirement income planning. The study shows that that as a person’s financial situation increases in complexity, so too does the potential value a full information strategy bring.

For example, in the study:

As the complexity in financial situations increased, the full information strategy increased projected annual retirement incomes by 3-51% compared to the minimum withdrawal strategy.
As the complexity in financial situations increased, the superfunds best efforts strategy increased projected annual retirement incomes by 3-34%, compared to the minimum withdrawal strategy.

Figure 1 below shows four fictional personas to illustrate the impact of incorporating personal information into retirement income strategies.^[3]

Figure 1: Superfund best efforts can improve retirement outcomes relative to basic strategies but cannot maximise potential financial value for retirees with complex financial circumstances compared to full information strategies. See the Notes section for the study methodology and assumptions.

Source: Vanguard calculations in AUD as at 1 July 2024 based on VCMM. All percentages have been rounded up to the nearest whole number for simplicity and clarity.
Chart notes: The results are presented in terms of annual “certainty equivalent income” so that the overall value of each retirement income strategy is able to be compared. “Certainty equivalent income” is a theoretical, guaranteed annual income that the household would receive for life, which provides the same level of satisfaction and security as implementing a strategy that could have different levels of income in each year. This is assessed based on the preferences of the personas.
Important: The projections or other information generated by the Vanguard Capital Markets Model (VCMM) regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from the VCMM are derived from 2,000 simulations for each modelled asset class in AUD. Simulations are as of 1 July 2024. Results from the model may vary with each use and over time.

Vanguard Australia’s Head of Financial Adviser Services Rachel White says the study underscores the importance of personal information in optimising retirement income strategies.

“The study shows that the more personal and household information incorporated into a retirement income strategy, the greater the potential financial benefits. This underscores the critical role personalised financial advice plays in improving retirement outcomes, particularly as financial complexity increases,” said Ms White.

“Comprehensive personalised advice, which combines financial acumen with a person’s full financial picture, is undoubtedly the gold standard. Unfortunately the cost of comprehensive personalised advice and a shortage of advisers make it hard for people to access this level of advice.”

Ms White says given Australia’s growing retirement needs and the potential value advisers can bring to retirement planning, there is a need for settings that encourage a greater supply of advisers in the market.

“Not everyone, however, needs that level of advice, and our research shows that even the consideration of limited personal information and broad assumptions – as in the case of the hypothetical superfunds best efforts strategy – can already lead to improved outcomes. And that’s a great reminder to make sure you’re engaging with your super fund and making the most of the information and services they provide,” said Ms White.

“But the study shows that for people with more complex financial situations, there is a substantial gap in potential retirement outcomes compared to when the full information strategy is used. We think more can be done to close this gap.”

Ms White said Vanguard advocates for policy-settings and industry practices that allows accessibility to the broad spectrum of guidance and advice to improve financial and retirement outcomes for Australians – from comprehensive personalised advice, to simple personalised guidance, to general information and education.

“The benefits of a more personalised approach are clear from a financial standpoint, but the emotional and behavioural benefits that come from having a personalised plan, and the confidence that brings, are also important.

“According to Vanguard’s upcoming How Australia Retires 2025 report, retirees who had a good idea or clear understanding of what actions they needed to take were three times more likely to feel highly confident in their ability to fund their desired lifestyle in retirement, and 65% more likely to have a positive outlook on retirement,” said Ms White.

Noting the draft legislation proposed to deliver the next tranche of the Federal Government’s financial advice reforms, Ms White says the task to bridge the Australia’s advice gap remained urgent.

“With millions of Australians expected to draw down on their super in the coming decade, there’s no time to waste in progressing reforms that uphold critical consumer protections and enable Australians to safely and easily access personalised advice to suit their individual needs.

“Vanguard is pleased to contribute this study and our upcoming How Australia Retires research to this important national conversation. And we continue to consult on legislative reform and industry initiatives that support Australians to enjoy the financial security and satisfaction they have worked hard to achieve.”

Notes:
[1] Vanguard Australia. Research summary – Delivering improved retirement outcomes at scale: The impact of missing personal information on retirement income strategies. July 2025: https://digital-assets.vanguard.com/intl/australia/shared/documents/resources/Vanguard_Summary-Impact_of_Personal_Info_on_Retirement_Income_Strategies.pdf Ankul Daga and Timothy Smart. Delivering Improved Retirement Outcomes at Scale: The Impact of Missing Personal Information on Retirement Income Strategies. 2024 available: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4739838
[2] The study results are presented in terms of annual certainty equivalent income so that the overall value of each retirement income strategy can be compared. “Certainty equivalent income” is a theoretical, guaranteed annual income that the household would receive for life, which provides the same level of satisfaction and security as implementing a strategy that could have different levels of income in each year.
[3] See below for important information about the study methodology and assumptions.

Methodology: This study uses fictional Australian retiree personas to simulate household spending patterns under various financial scenarios. It includes Age Pension entitlements, personal finances, partner status, and uncertainties around longevity, market returns and inflation. Taxes and housing wealth are excluded, assumes retirees hold tax-free superannuation pensions. Personas aim to balance spending more with financial certainty, balance avoiding running out of money with not leaving an inheritance, and ensure surviving partners maintain a two-thirds of the couple’s living standard. These examples are illustrative only and are based on the factors and assumptions stated. They should not be taken to contain or provide an estimate or forecast of retirement outcomes.

Important: The projections and other information generated by the VCMM regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from VCMM are derived from 10,000 simulations for each modeled asset class. Simulations as of July 1, 2024. Results from the model may vary with each use and over time. For more information see the Chart Notes. The VCMM projections are based on a statistical analysis of historical data. Future returns may behave differently from the historical patterns captured in the VCMM. More importantly, the VCMM may be underestimating extreme negative scenarios unobserved in the historical period on which the model estimation is based.The Vanguard Capital Markets Model® is a proprietary financial simulation tool developed and maintained by Vanguard’s primary investment research and advice teams. The model forecasts distributions of future returns for a wide array of broad asset classes. Those asset classes include U.S. and international equity markets, several maturities of the U.S. Treasury and corporate fixed income markets, international fixed income markets, U.S. money markets, commodities, and certain alternative investment strategies. The theoretical and empirical foundation for the Vanguard Capital Markets Model is that the returns of various asset classes reflect the compensation investors require for bearing different types of systematic risk (beta). At the core of the model are estimates of the dynamic statistical relationship between risk factors and asset returns, obtained from statistical analysis based on available monthly financial and economic data from as early as 1960. Using a system of estimated equations, the model then applies a Monte Carlo simulation method to project the estimated interrelationships among risk factors and asset classes as well as uncertainty and randomness over time. The model generates a large set of simulated outcomes for each asset class over several time horizons. Forecasts are obtained by computing measures of central tendency in these simulations. Results produced by the tool will vary with each use and over time.

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BT Panorama managed accounts now exceed 400, diversified and ESG options added

Thu, 09 May 2024 21:55:27 +0000

Zac Leman

BT’s managed accounts offering has reached a milestone, with the total number of managed portfolios on BT Panorama pushing past 400, and funds under administration in these products reaching $16 billion.^[1]

So far this calendar year, new products that have launched on the platform include those managed by Vanguard, Watershed Funds Management and Quilla Consulting. The range of additions includes diversified options, which are open to all advisers and clients. Managed accounts that are tailored for certain advice practices, as well as new ESG (environmental, social, governance) options, have also been introduced.

Zac Leman, Head of Managed Accounts, BT, said: “We continue to build our offer for advisers on BT Panorama, to meet adviser demand for managed account solutions. The new additions just from this year demonstrate the breadth of products that are available on the platform.

“In particular, the various risk profiles of the diversified options cater to the needs of advisers who are looking for an efficient way to manage the investments of a wide-ranging client base.”

Managed accounts can help advisers introduce greater efficiencies in their business and, according to Investment Trends, 63% of advisers surveyed said that using managed accounts result in substantial time savings.^[2]

In the 12 months to 30 April 2024, BT added 94 managed portfolios on BT Panorama. Further, BT’s managed accounts offering grew to a total of over 400 managed portfolios, with funds under administration increasing by 31% to $16bn during this period (excluding Adviser and Tailored Portfolios). FUA in BT’s managed portfolios now represent 14% of the total $111.3bn FUA on BT Panorama (also as of 30 April 2024).

Vanguard Diversified Managed Account Strategies launching this week

Launching this week is Vanguard’s Diversified Managed Account Strategies, a multi-asset portfolio construction solution, available on BT Panorama’s full menu as well as its low-cost Compact menu.

Compared to the BT Panorama full menu, the Compact menu offers a narrower range of products, at a lower price – a fixed dollar fee of $180 and a yearly asset-based administration fee of 0.15%.

With four risk profiles available, Vanguard’s Diversified Managed Account Strategies make multi-asset portfolio construction simple and efficient for advice practices.

The strategies offer low-cost exposure to over 16,000 securities across a range of asset classes. Vanguard Australia was recently awarded Fund Manager of the Year – Multisector at the 2024 Morningstar Awards for Investing Excellence in Australia, in recognition of its quality multi-sector investments that have delivered long-term returns for investors.

“We are excited to make this announcement, as the addition of our Diversified Managed Account Strategies on BT Panorama represents a significant expansion of Vanguard’s managed account offer via new distribution channels,” said Rachel White, Head of Financial Adviser Services, Vanguard Investments Australia.

Ms White added: “Most importantly, it reflects the growing demand from advisers for gaining greater access to our diversified solutions.”

Tailored solutions for advice firms

William Buck Wealth Advisers recently launched a suite of three diversified portfolios on BT Panorama.

Adrian Frinsdorf, Director, Wealth Advisory at William Buck, said: “We’ve dealt with BT for decades. The team has shone, assisting us with the implementation of our portfolios, and working very collaboratively to provide a great solution for us and our clients.”

Meanwhile, investment manager Quilla Consulting has partnered with Cygnet Financial to create three diversified managed portfolios that are tailored for the dealer group.

Watershed Funds Management products open to all advisers

Watershed Funds Management has launched four new portfolios, which are available to all advisers and their clients. The new managed accounts have exposure to Australian shares, international shares, emerging markets and income-focused allocations.

“It’s been a busy start to the year,” Mr Leman said, “and with a strong product pipeline, we expect to see continued growth in managed accounts.”

———

Notes:
[1] As of 30 April 2024.
[2] 2 According to Investment Trends, 63% of advisers surveyed said that managed accounts help them save 17.1 hours on average in a typical work week. SPDR/ETFs / Investment Trends Managed Accounts Report 2023.

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Vanguard broadens distribution channels through HUB24 and Netwealth

Thu, 25 Apr 2024 21:35:33 +0000

Rachel White

Vanguard has announced that, based on adviser feedback and increasing demand, its diversified managed account strategies have been added to more leading adviser investment platforms.

In addition to the Macquarie Wrap platform, the strategies will now be available to advisers and their clients on the following superannuation and investor directed portfolio services (IDPS) menus:

HUB24: Discover, Core and Choice
Netwealth: Accelerator Core and Accelerator Plus

“We are excited to make this announcement, as the addition of these investment platforms represents a significant expansion of Vanguard’s managed account offer via new distribution channels,” said Rachel White, Head of Financial Adviser Services, Vanguard Australia.

“Most importantly, it reflects the growing demand from advisers for gaining greater access to our diversified solutions, which until recently have only been available on the Macquarie Wrap platform.

“Behind the increased adviser demand is a recognition that Vanguard’s leading-edge diversified managed account strategies make multi-asset portfolio construction simple and efficient, without compromising on sophistication or performance.

“With four risk profiles available, including conservative, balanced, growth, and high growth, the Vanguard strategies offer low-cost, instant diversification with exposure to over 16,000 securities across a range of asset classes, all backed by Vanguard’s multi-asset investment expertise and proven strategic asset allocation approach.”

The diversified strategies mimic those employed across Vanguard’s highly successful range of diversified funds, which since inception more than 20 years ago have delivered growth for investors and supported successful outcomes for advisers and their clients.

This news comes as Vanguard Investments Australia was recently awarded Fund Manager of the Year – Multisector at the 2024 Morningstar Awards for Investing Excellence in Australia.

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Vanguard launches new multi-factor fund and active ETF and names new head of its Quantitative Equity Group

Wed, 10 Apr 2019 21:35:16 +0000

Vanguard has announced the launch of a new global multi-factor fund and ETF, adding to its growing range of factor products.

Following the successful launch of value and minimum volatility factor ETFs this time last year, Vanguard is introducing a core equity solution which offers a diversified portfolio of global shares, aiming to outperform the benchmark by optimally combining three factors – value, momentum and quality.

Vanguard describes factors as the underlying attributes that influence how an investment behaves. By targeting these attributes, factor-based investments attempt to deliver an investment premium. A multi-factor strategy may suit investors and advisers who want to incorporate factor strategies into portfolios but prefer not to have to select or rebalance between single factors.

The Vanguard Global Multi-factor Fund for wholesale investors and the Vanguard Global Multi-factor Active ETF (Managed Fund) (ASX: VGMF) are open for investment from today, competitively priced at 0.35% p.a. and 0.33% p.a. respectively.

Speaking about the launch, Vanguard’s investment product strategy manager, Rachel White, commented, “We are delivering on our commitment to offer investors more low-cost active fund options with the addition of this multi-factor strategy, which has been sought after by advisers following the introduction of our value and minimum volatility factor offerings.

“Globally we’ve seen good adoption of this multi-factor strategy with the blending of factors helping to smooth returns, reduce downside risk and provide diversification benefits.

“Investors can use the Fund or ETF as a core global equity holding which can act as a lower cost substitute to a high cost active equity strategy. The strategy could also complement an index portfolio for investors seeking to add outperformance potential while maintaining low costs.

“While some factor offerings in the market track a static benchmark, we believe through actively managing our factor portfolios we can provide investors with a more consistent factor exposure, weighting shares according to their exposure to each factor rather than by their market capitalisation. Active implementation helps to keep costs to a minimum by carefully evaluating the trade-off between rebalancing needs and trading costs. ”

New head of Vanguard’s Australian Quantitative Equity Group

Vanguard’s new multi-factor strategy will be managed by Vanguard’s Quantitative Equity Group (QEG) who employ rules-based active management to provide targeted and consistent exposure to factors in this strategy in a highly diversified, low cost and transparent way.

Joining Vanguard’s global QEG leadership team, long-standing senior investment executive, Alla Kolganova, has been appointed to lead the Australian QEG team as current head, Mike Roach, transitions into a new role as Head of US Equity Operational Risk at Vanguard’s US headquarters in Malvern, PA.

Alla joined Vanguard in February 2000, and has since held a range of senior roles within Vanguard’s Investment Management Group, notably as Head of Australian Equities and Property Securities, and Head of Equities, Asia Pacific. In 2015 she moved to Vanguard’s UK team to lead the equity index portfolio management and trading team in Europe. Alla returned to Australia in 2018 to join the Vanguard’s Investment Strategy Group as a Principal and Senior Investment Strategist.

Head of Investment Management Group, Asia Pacific, Daniel Reyes, welcomed Alla and thanked Mike for his prominent role in bringing active management to Vanguard’s Australian investors. He commented also on Vanguard’s QEG function, “Vanguard’s Quantitative Equity Group is efficiently staffed with a deep bench of credentialed professionals who are supported by the larger Vanguard organisation to leverage the best practices, low-cost execution and expertise of traders in multiple markets around the globe.

“QEG’s collaborative approach over the past 30 years sets them apart from many competitors. They seek to add value through low costs, diversification and predictability relative to an index, as opposed to relying on star managers or key individuals.”

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