Advisers should help change spending behaviour

Financial advisers should focus on changing the behaviour of clients and delivering advice as retirees are not spending their retirement income, according to a whitepaper.

Speaking at a media briefing, MYMAVINS consulting partner, Jason Andriessen said despite people not intending to bequest large amounts of their superannuation they were not spending it either as they did not know how much to spend.

Andriessen said many retirees used the government’s account-based pension minimum level as their guide.

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“Most of the value that we add in the short-term is helping a client feel more confident to spend, understanding what they control and what they can't control, and having a plan B so that they feel more resilient. We are I think we as an industry as standing in the way of that,” he said.

“Financial advisers should focus more on changing the behaviour of their clients and delivering advice is my observation.

“Delivering a statement of advice, and I get that that's the legal requirement, with 20-point action plans is not helpful. It's creating learned helplessness and not empowering at all. If we can get to a stage where we're changing behaviour one at a time, I think that's the key.”

He said changing behaviours started with redefining what a good financial decision was and if client satisfaction surveys were repurposed it could measure how confident and in control retirees felt and that would drive different outcomes.

Andriessen said MYMAVIN’s ’Retirement: The now and the then’ whitepaper commissioned by Fidelity found it was pre-retirees that worried about running out of money.

“Retirees realise that they can be flexible and they understand the difference between their needs and wants and they're willing to give up on their wants if things go off track. What they're particularly worried about is growing old with dignity and ageing well,” he said.

The whitepaper said to build client capability, financial advisers could make their strategy development more transparent and including the client in their deliberations.

“When the client co-creates their financial plan they feel more empowered because they better understand the considerations and trade-offs,” it said.

“The implementation of the strategy could be staged over time to embed behaviour change. When we change our behaviour and see the benefits we feel successful, which builds our confidence and improves our emotional experience.”

For instilling spending confidence the white paper said a helpful framework for contingency planning was needed to anchor clients’ consumption needs rather than their savings balance or investment capital.

“Ultimately, pre-retirees and retirees are seeking confidence to spend. If they’re comfortable that they can spend today and still be responsible for the future, they’re happier,” it said.

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I find this sort of reporting offensive! Of course we have these sorts of conversations with clients, along with how to handle their wayward children / relationship issues / where to live etc. Only product advice makes its way into the voluminous SOA documents because hardly any of our clients read it!

What’s that old saying ? You can lead a horse to water but you can’t make him drink !
It’s the same here !

Let me fix it for you: replace "Financial Advisers" with "product providers"

Hi All,
I don't know this guy, no personal offence to him. BUT I am getting really sick and tired of reading articles that financial planners "should" do this, and they "need" to do that.
Of course we are doing it and nobody who is actually an adviser/planner puts any value in the SoA document - its a damn legal requirement.
Can we make make 2022 "the year of no consultants". We all need a break from it.

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