Lifetime pensions are not “the silver bullet” as advisers also need to address their client’s financial confidence as they approach or continue their retirement.
Speaking at the Post Retirement Australia conference, Generation Life chief executive, Grant Hackett, said financial advisers would need to find products that provide a lot more value to their clients, with the expectation of a rise in interest rates.
Hackett said this would mean financial advisers had a new focus on educating clients and providing rational product solutions to their emotional needs.
“First and foremost, when it comes to a financial adviser, they're trying to look at ‘how can I actually solve and provide strategy to the individual client and solve the [financial] problem, or the emotional problem?’” Hackett said.
Commenting on a new lifetime pension product provided by QSuper, Hackett said everything around the selling side of the industry was about addressing the emotional need, not the intellectual need.
“This is a very rational product that makes sense to all of us sitting here today… but to a mum and dad at home, they're looking at this, and all they want to do is just have fun and enjoy their retirement, enjoy their lifestyle and leave something along to their kids,” he said.
Hackett said there were a number of factors causing these emotional needs and this created a lack of financial confidence in retirement.
This included concerns over how much was in a retiree’s account-based pension, their family and spousal needs, the methods of their wealth transfer and concerns around the Age Pension.
He said it was common for late-stage retirees to have large amounts of capital sitting in their accounts because they did not receive this kind of “emotional” advice at the beginning of their retirement.
“It’s a financial adviser’s role now to guide through all that and look at all the products that are now starting to come to the market and go, ‘hey, we can solve for this a lot more effectively than what we've been able to over the last 10 or 15 years’,” Hackett said.
He said it was now the role of product manufactures like Generation Life to support that conversation advisers would need to have.