Retirees need more advice: Report

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Retirees are not getting enough information about how to make their income last, the body that represents Australia’s superannuation funds says.

Sunday, April 5th 2015, 6:00AM 1 Comment

by Susan Edmunds

The Association of Supernnaution Funds of Australia has teamed up with State Street Global Advisers, to produce a report, The Future of Retirement Income.

It claims advisers who deal with retired clients should be subject to higher qualification requirements, and a lack of standardised guidance on how to manage assets in retirements may mean clients are missing out.

ASFA director of research Ross Clare told Good Returns only a minority of those retiring where getting holistic financial advice to maximise their income.

“If you don’t have a lot of money, it doesn’t make sense in terms of the amount you have to pay out. A$3000 is not unusual for holistic advice. If you have A$50,000 in your account, it doesn’t make sense to go down that path.”

Funds were opting for limited advice offerings or roboadvice to help their members, he said. “It comes down to how can the cost of providing advice be reduced?”

The report said an average couple would need just over A$500,000 to retire comfortably, if they owned their own home. But including growth assets in their portfolios would improve their retirement income stream.

“The industry must be able to help retirees by providing retirement products which generate a regular and stable income stream, provide longevity risk management and which are flexible enough to deal with unexpected life events.”

The report called for the Australian regulator to remove impediments to income stream products being developed and for the qualifications for financial advisers to be reviewed so increased requirements were placed on those who provided retirement advice.

“The development of self-guided advice retirement tools should be encouraged,” it said. “In the current system, there is no standardised guidance as to how to manage assets in retirement. And this means that decisions which must be made at the point of retirement can be challenging and confusing. As most retirees will not have access to good financial advice, there is a risk that their decision making is sub-optimal, and that they may end up invested in an inappropriate product.”

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