More complex strategies could give greater confidence to retirees

Financial advisers can improve confidence of retirees by using more complex approaches that instil greater precision in goals and outcomes.

Speaking at a Financial Planning Association of Australia (FPA), Fidelity head of client solutions and retirement, Richard Dinham said a more complex approach could enable advisers to deliver a better disciplined and precise approach.

“It could be an individual asset liability modelling exercise. Whilst it’s more complex and potentially more costly, it may instil greater confidence with clients knowing that you have a greater degree of precision that had gone into the construction of that framework,” Dinham said.

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"A more complex bucketing income layering approach could deliver improved confidence with clients."

He noted that implications with more complex strategies would be the potential difficulties in explaining the strategy to clients leaving it less immediately transparent and harder to engage with clients.

“It may not suit less sophisticated clients and there will be greater time and input required from them and the planner in putting a plan together,” he said.

“With the higher costs – regular reviews will be needed anyways but that's probably a good thing. That certainly would be an implication of those types of approaches.”

Dinham noted advisers could give a sense of control and thus confidence to clients first with a counselling exercise.

“You can look at controlling those important things like discretionary spending, lifestyle spending, and that level of control over the financial aspects,” he said.

“Purpose and community are absolutely crucial, so helping clients engage on these crucial areas, will really help them deliver a better life satisfaction.”




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I just love how institutions are now telling us about ' bucketing' strategies, something which advisers have been practicing for 20 years, and clients in their own planning have intuitively been doing ( cash reserve for a rainy day) - it doesn't need to be complicated, and it doesn't need sophisticated modelling to implement, just a practical discussion with a client about their resources, income needs, and risk level.

Thanks Bozo...

I went straight to your comment and realised I don't need to read this article. :P

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