Planners should encourage healthy lifestyle

In order to ensure clients are able to fund their own retirement, financial planners have the responsibility to actively encourage a healthy lifestyle, according to a financial planning executive.

Despite the Government's commitment to increase the superannuation guarantee to 12 per cent, investment research manager at Centric Wealth Ben McBride said Australians will still be largely unprepared to fund their own retirement.

This is mostly due to the fact that most people underestimate how long they are going to live, which is why very few will be able to effectively plan their financial affairs for the duration of their life, according to McBride.

"The first step in understanding and then mitigating the longevity risk is to understand the investment lifecycle," McBride said.

The ‘investment lifecycle' describes how people translate human capital into financial capital during their lifetime.

Financial advisers have the responsibility to outline key steps to achieving goals in retirement, such as reviewing estate planning arrangements, contributing more to superannuation, monitoring income levels and encouraging a healthy lifestyle.

"While it may appear unusual for your wealth adviser to be telling you to keep healthy and active, this is a relatively simple way of lowering the probability of substantial health-care costs, which can significantly affect the quality of their retirement," McBride said.

Another key part of effective financial planning is reviewing estate planning arrangements as early as possible, including wills, inheritance and funeral arrangements, but also how people want to be cared for in the event of ill health.

"By engaging your family in the estate planning process as early as possible, you will be able to reduce the financial and personal impacts these issues may have when the time comes," McBride said.