Financial advisers should shift the focus of their advice to the values and purposes of their clients, instead of investment or retirement goals to better engage clients, particularly those approaching retirement according to an award winning adviser.
David Reed of the Retirement Advice Centre, who was named the 2015 Association of Financial Advisers (AFA) Adviser of the Year, said advisers face a phenomenon not seen before in that the largest group of people in history will reach age 65 and move into retirement.
“At this stage we are no longer dealing with reaching goals but looking at people’s value and purposes and what they want to do in retirement,” Reed said pointing out that many retirement age people have not stopped working since the global financial crisis.
“The concerns are not about money anymore but people are scared of retiring and we have heard of men aged 60 to 70 who suicide or go through a divorce after they retire,”
“When we looked at values based advice we found that people are not aware of what they are retiring to but they do know what they are retiring from,” Reed said.
“In these instance financial planning is more about being a coach – less preaching and more guiding.”
Reed said advisers need to be aware of the growing wave of retirees and what that will do to investment markets and also consider how generational wealth may be handled.
“The impact of around 96% if pensions moving into drawn down phase in the next 10 years will have a big market impact.”
“At the same time modern portfolio theory has worked well for wealth accumulators but in retirement there is also a need to invest. Exposing assets to growth will create generation wealth and a legacy,” Reed said.
These approaches will also stave off robo-advice but advisers need to be sure of what they are doing and how clients will perceive them.
“I believe the big change will occur if an adviser has unengaged clients who will be lost to robo-advice services as there will be so much noise coming their way,” Reed said.
“Sole advisers with limited numbers of advisers will always be around but the issue will what level of engagement will they have with clients.”
