Key findings of the Investment Trends 2015 Retirement Planner Report:
- Financial planners are becoming even more sophisticated in their product advice to retirees
- Challenger is growing the annuities market by making the product easy to understand and use
- CFS FirstChoice was the highest rated platform for pre-retiree/retiree capabilities overall
- Planners seek the next generation of retirement modelling tools and calculators
In its fifth year, the 2015 Retirement Planner Report is a comprehensive study of Australian financial planners and their advice to retirees and pre-retirees. The study is based on a survey of 591 financial planners concluded in October 2015. This year’s study highlights a number of interesting trends:
Financial planners are becoming even more sophisticated in their product advice to retirees
Suppressed cash rates and heightened market volatility are driving financial planners to seek new solutions for their retiree clients. Over the past 12 months, financial planners placed only 16% of their new retiree client flows into cash and term deposits, down from 22% in our last study.
“To continue being seen as adding value to their pre-retiree and retiree clients, especially in this high volatility and low interest rate environment, financial planners are reducing their flows into safe haven investments such as cash and term deposits in favour of more sophisticated products,” said Recep Peker, Investment Trends Head of Research for Wealth Management. “Annuities, diversified funds and income funds will continue to be the winners as planners seek higher yielding, diversified investments”.
Relative to their current usage, two products stand out for future growth potential among the older client segments: Annuities and goals/outcomes-based funds.
Challenger is growing the annuities market by making the product easy to understand and use
The number of planners who advise on annuities continues to grow. 41% say they recommended annuities in the 12 months to December 2015, up from 38% in 2014 and 32% in 2013. Annuities’ rise in popularity is due in no small part to Challenger’s efforts in raising awareness and education of the product.
“Planners are becoming proficient in recommending annuities, with more finding them easy to understand and use,” said Peker. “Those who explain annuities to clients typically spend only 14 minutes doing so, versus 17 minutes taken to explain managed funds.”
“Client awareness of the Challenger Annuities brand has also contributed significantly to planners’ ability to recommend annuities, helping to grow the market”.
CFS FirstChoice was the highest rated platform for pre-retiree/retiree capabilities overall
Planners generally rate their platforms exceptionally well overall. While platforms’ ability to service pre-retiree/retiree clients also score well, the evolving needs of planners means a gap is emerging, which is an opportunity for differentiation.
With the recent addition of annuities and supporting tools and education well received by its users, CFS FirstChoice now leads the platform industry in terms of overall planner satisfaction with its pre-retiree/retiree servicing capabilities.
The top four platforms by planner satisfaction with pre-retiree/retiree capabilities are:
- CFS FirstChoice
- Macquarie Wrap
- CFS FirstWrap
- Asgard eWRAP
Planners seek the next generation of retirement modelling tools and calculators
The majority of planners (84%, up from 82% in 2014) are seeking assistance from product providers to better service their pre-retiree and retiree clients. They most commonly seek online tools and calculators, ahead of education/awareness initiatives and improved products.
“Planners want product providers to equip them with the necessary tools to engage their pre-retiree and retiree clients,” said Peker. “Having the right products is important, but these need to be backed with interactive tools and calculators that planners can use alongside their clients.”