Produced in partnership with North.
Investing for retirement is a long game. Maybe, one of the longest. Many Australians won’t approach a financial adviser to begin retirement planning until close to 50-years-old. Of course, there are steps that can be put into place at any age, but I’ve heard time and time again advisers lamenting, “if they’d just come to me ten or even five years earlier, their retirement outcomes could be so much better”. But when should retirement planning really begin? In my opinion it starts with a person’s first super account.
To put it simply, it starts on the first day of their first job.
That’s why it’s so important to find investments that offer versatility and flexibility, and why separately managed accounts (SMAs), with their ability to take clients to – and through – retirement, are so effective. And not just for the client but for the advisor too.
Aside from increased transparency, improved tax efficiency and the expertise of a professional investment manager managing their portfolio, there are several ways SMAs can be extremely useful when investing for retirement. Particularly during the transition to retirement, when stumbling blocks can appear.
Firstly, you can change SMAs without having to sell all the underlying assets, allowing portfolios to evolve to suit your client’s changing needs makes them invaluable. Over the years, it won’t just be the markets that are changing, but your clients as well. Whether you need to de-risk as part of a decumulation strategy, recalibrate their risk profile following a change in circumstances, or increase it to maximise return prospects, SMAs can be a strong and versatile option.
This versatility also makes them a great choice for navigating volatile markets.
Volatile markets and fees can have a material impact on a person’s retirement savings and, by virtue of that, on a person’s retirement. So, the ability to move and make investment decisions quickly and execute them on platform for all clients instantly and seamlessly, helps manage sequencing risks in the lead up to retirement. Leading platform SMAs also allow you to buy and sell assets simultaneously, which means your clients are always fully invested and you don’t risk missing that bounce back day in the market during volatility.
Another key benefit of SMAs for retirement investment is the option for in-specie transfers which, while well-known to many advisers, is often under-utilised. Being able to move investments from one portfolio to another without realising gains or converting them into cash first is unique to SMAs on platform, and can provide a substantial tax benefit when implemented correctly, minimising unnecessary capital gains tax and transaction costs.
Finally, SMAs can be a more personalised investment solution – personalised to the investor or to the adviser. This is not only great for both the client but also for the advisor as it promotes active portfolio management from an earlier age, meaning advisers can customise a clients’ managed account to align more closely with their goals, delivering stronger results and peace of mind. It also allows the advisor to spend more time with their clients, strengthening their relationship, and the adviser’s understanding of their client’s specific goals and appetite for risk.
In addition, when an SMA is paired with an innovative retirement income stream (such as MyNorth Lifetime) from when you start work, advisers can add significant value to a clients’ retirement by dramatically increasing the levers a client can exercise at retirement to dramatically improve the certainty of their income and social security benefits.
With approximately 4.2 million retirees in Australia, and another 700,000 people intending to join them within the next five years – 250,000 of those, within the next two – Australia is a market ripe for advisers.
The real opportunity, however, are all the Australians who haven’t yet started to plan for retirement, and who won’t be retiring any time soon. They’re the ones whose retirement investments have a long path ahead of them, including potentially volatile markets, and who would benefit the most from expert advice; a close, long-lasting relationship with their adviser; and all the advantages SMAs provide.
