Millennium 3 advice practice Reed Financial has spent the last two years reinventing its business model and will start 2014 with a new name and a narrower focus on helping baby boomers transition to retirement both psychologically and financially.
Advisers must become specialists in order to thrive, according to principal David Reed who believes generalist practitioners will struggle in the increasingly competitive marketplace.
Early next year, Reed Financial will rebrand to The Retirement Advice Centre, symbolising its sharper focus on professionals approaching retirement age.
Reed said his decision to reposition his business is commercial, citing statistics that around 700 Australians turn age 65 each day, which is set to double over the next 20 years. By 2033, 25 per cent of the population will be over 65.
He believes advisers will be able to command a premium price for retirement advice, given the high demand and complexities involved.
“There is a commercial opportunity which isn’t being adequately exploited by advisers. There aren’t a lot of financial planners in the retirement incomes space but that has to change,” he said.
“I used to focus on wealth accumulators too because none of my clients wanted to retire but what I learned was they were afraid of retirement and they didn’t know exactly how to retire.”
Historically the business provided advice to a wide demographic ranging from young wealth accumulators to aggressive high net worth investors to retirees focused on capital preservation. A large number of its clients are doctors, lawyers, engineers and academics.
“We’ll still focus on people in those occupations but we will narrow our focus to those who are preparing for retirement or who have retired,” Reed said.
“The financial planning industry still places too much emphasis on the money side of things, but a running theme that we’ve observed is that people tell us they were never properly prepared for retirement psychologically.”
Reed, who has been a financial planner since 2001, has created a new framework for getting clients ready to retire drawing on work from mental health coach and psychologist Dr Michael Martin; health expert Dr Barry Lavallee; Morningstar’s head of retirement research David Blanchette and Professor Michael Finke, who leads the Texas Tech Financial Planning Graduate Program.
The framework seeks to align the expectations of clients with the reality of retirement.
“Retirement is not the life long holiday that it’s often painted to be, and we need to better match the psychological and financial needs of clients,” Reed said.
“Too many financial planners are focused on growing wealth without adequate attention to capital preservation. That’s why many client portfolios look the same at age 65 as they did at age 35. The bedrock of our advice for retirees is that safety trumps everything.”
