Keep post-retirement solutions simple

If post-retirement products are a car, giving people a gauge to see when they’re running out of petrol, and an adviser-shaped wheel to steer them in the right direction, is as simple as they need to be, a panel has told Money Management and Super Review’s Future of Wealth Management conference.

Andrew Boal, head of Australasia, Willis Towers Watson, said the industry is capable of developing the products that are needed, but what it has lacked is the regulatory environment to permit it.

He pointed to the means test to be introduced in July next year and said a change of behaviour would follow.

David Knox, senior partner, Mercer, agreed, and said Australia was venturing into a space where the rest of the world would gradually find itself but was doing so first, and expected Australia would be a world leader.

When asked if post-retirement products had been over-engineered, Boal likened solutions to a car, and said members, in the early stages, needed graphic presentations to see how they were tracking towards retirement.

“And, when they get there, present them with products to show them when the petrol will run out,” he said.

Boal said advisers would then play an ongoing role to help members adjust their course of action before they hit the final annuity stage.

“That is a really important conversation so that again people understand how they’re tracking and what they have to do to get them back on course,” said Matt Drennan, head of savings and investments, Zurich. 

In terms of retirement income, the panel indicated that too much emphasis was put on income products, and members needed to “broaden the picture”.

“We have focused on retirement income, but income is only part of retirement,” said Knox. “We need to broaden the picture a little bit, it’s ‘where am I living, where might I live when I’m 90, what might happen if my partner dies?’” he said.

Drennan said ultimately, members needed products that saw them through various life stages and they needed the guidance of advisers in seeking them out.

“The industry must develop a combination of products that gives some certainty around when you enter the annuity stage,” he said.