Financial planners need to develop a specialised set of skills to deal effectively with clients in the post-retirement phase of their lives, according to James Grant, executive manager of wealth management for Industry Fund Services (IFS).
Grant says the challenges that financial planners face include “understanding the members’ goals and not automatically translating that into financial goals”.
“It’s really understanding the member, or the customer and having an advice process that is able to be followed and is able to communicate clearly and effectively and, arguably most importantly, is able to be implemented,” he says.
“Advice is fantastic, but unless someone takes action that puts them in a better position, the advice has been for nought.”
Grant says advice that takes into account non-financial goals means planners have to approach the task with an open mind and flexible range of options.
“I do not want to be in a situation where I’m instantly thinking I’m going to do a transition to retirement [TTR] strategy, or I’m automatically going to do a pension strategy,” Grant says.
“I want to understand what the member wants from their retirement. It’s not just about setting up a minimum income stream, it’s about understanding what sort of lifestyle they want, what that means as far as lump sums are concerned and what they means as far as longevity is concerned.
“They do all lead back to financial calculations, but it’s not a one-size-fits-all-approach. And a temptation for financial planners is to think, well OK, this is what I have seen before and this is what I do with people in this situation.”
Grant is a panellist at the Conexus Financial Post Retirement Conference in Sydney on March 4, as part of a session on education and advice solutions. Other panellists are Lukasz De Pourbaix, general manager of investment consulting for Lonsec Research; Matt Englund, managing director of Securitor & Licensee Select at BT Financial Group; Michael Monaghan, managing director of State Super Financial Services; and Matt Lawler, chief executive officer of Yellow Brick Road Wealth Management.
The conference will provide insights and the latest thinking from leading financial planning firms and other organisations on crafting effective post-retirement advice solutions.
Financial planners need to be trained to listen to clients in or approaching retirement in a different way from how they listen to clients in accumulation phase. Grant says post-retirement clients express their needs and their goals differently from accumulation clients.
“There’s an increased conservativeness,” he says.
“There’s a consciousness around no longer earning money but spending everything they have accumulated.
“It’s one of the hardest things to convey to an up-and-coming financial planner, that you’re in a situation where you’re telling someone what you think they should do with the money they have saved their entire life. It’s a big responsibility.
“It’s something that we recognise we need to improve on. It’s something that we are now turning our attention on, moving away from having purely financial conversations and more into holistic conversations.
“It’s a big job, and it involves conversations other than just superannuation. We have been, in the past – understandably, because of who we work for – relatively superannuation-centric.”
Grant says that IFS will always be “superannuation-centric, because we have to face the hard fact that the majority of a majority of people have most of their wealth tied up in superannuation”.
Grant says it should not be concluded that IFS advisers do not already possess the right skills to deal with post-retirement clients.
“It’s not necessarily a journey to doing something that we are not doing now; it’s a journey to doing something better than we’re doing now,” he says.
“It’s about working on the skill set and the approach that advisers take, rather than completely new skills.”
Grant says IFS employs fewer than 80 advisers, and the potential number of clients – members of super funds – served “would be in the millions”. Grant says IFS is looking to increase adviser numbers.
