Steve Schubert
There is a strong financial imperative for financial planners to focus on servicing the ‘deccumulation’ segment of the market, however, strategies that may have worked in the past might not be suitable for new-age retirees, according to Russell Investment Group director of superannuation Steve Schubert.
Referring to recently released Australian Psychological Society research, Schubert said there was mounting evidence that people were now expecting to return to some level of paid work after they retire, for personal reasons, not just financial ones.
“If that is where we are headed, then planners and financial services providers need to make sure their products can deal with that,” he said.
“Historically, we haven’t done that — we’ve created savings products and then when people finish saving they have got to find something to do with their money, so a planner might put them in some funds and help them come up with an expenditure plan, but in the end, whether people stick to their budgets is a personal thing, and it’s very hard to get the linkage between that and what’s happening on the investment side.”
Schubert added that the idea of putting all your money in cash when you retire so that you can easily access it might have appeal from an investment risk point of view, but it carries significant longevity risk.
“From a financial motivation point of view, one of the things planners need to think about is that over the next 30 to 40 years the proportion of superannuation savings that will be held by people over 65, which at the moment is over $1 trillion, will grow [from about 10 per cent] to about 40 per cent,” he said.
“So if 40 per cent of our massive superannuation industry is held by people 65 or over, then all of us who make a living off servicing those people ought to be focusing on how to meet their needs.”
According to Schubert, the type of product features the new-age retiree sees as being essential are flexibility, the option to run multiple accounts and the convenience of being treated like a single customer.
