Planners most challenged by longevity and market risks

The challenges most concerning financial planners in 2017 have changed since the previous year, with stress over regulatory reforms lessening as the dust settles on the Government’s superannuation reforms, according to Investment Trends.

The Investment Trends 2017 Retirement Planner Report, which surveyed 459 planners, found that while 36 per cent of planners still flagged regulatory uncertainty as a key concern in 2017, that was a 25 per cent drop from the year before.

Investment Trends research director, Recep Peker, said that this reflected that the 2016 survey was conducted in the aftermath of the Turnbull Government’s announcements of changes to superannuation legislation.

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The survey identified two major new, and growing, challenges faced by planners advising clients in the retirement phase.

Firstly, planners were increasingly worried about being able to mitigate longevity risk. Forty-one per cent of surveyed advisers flagged this as a big challenge, jumping from 27 per cent the previous year.

Peker said this this exemplified a “notable shift in how planners approach the retirement sector”, as more and more planners were considering an all-of-life approach in advising.

He pointed to the fact that in 2014 just 21 per cent of planners said that they planned for an all-of-life approach to when advising retiree clients, compared to 28 per cent in 2017.

Secondly, planners felt that the ability to mitigate market risk was a significant challenge they faced in advising those in retirement. Concern over this grew by 15 per cent from 2016 to 2017, with 38 per cent of planners feeling stress over it last year.

Peker said that current market conditions may have led to planners finding this a more pressing challenge.

“There’s a fair amount of volatility in the market so picking growth is hard, and at the same time interest rates are low,” he said.

There was a strong connection between the two concerns, with those who were worried about minimising either longevity or market risk tending to also be concerned about the other.

The Report also found that planners were challenged in finding ways to add value to clients to had already retired, such as providing ongoing services.

Peker said that this may be attributable to the Future of Financial Advice, and in the increased need for advisers to show that they are adding value for their clients.




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