The next frontier: creating an advice offer for the booming retiree market


The great migration is underway.

Australia’s large and prosperous cohort of baby boomers is making the journey from accumulation to retirement. Travelling with them are trillions of dollars of assets in need of careful management. For advisers who can address the complex needs of this market with a compelling value proposition, the opportunity is ripe for the picking.

Extract from a whitepaper written for BT by Robert DeChellis, Consulting Retirement Strategist for Allianz Retire+

Thinking beyond accumulation

Without a doubt, we are in the midst of the greatest disruption ever seen in financial services. New technologies, increased regulation and a cost epidemic are slowly eroding profit margins and business models. It is significantly changing the competitive landscape for financial advisers in Australia.

Many advisers are looking at how they can transform their business to stay competitive. Technology is naturally a big part of this evolution. But in my view, one of the most compelling opportunities is for advisers to service the growing number of baby boomers who are in (or will soon enter) the retirement phase.

This is a big shift for advisers, many of whom have focused their efforts on people in accumulation. But never before has there been such a pressing need for trusted financial advisers to help retirees live out retirement in a sustainable and satisfying way. In my view, the opportunity for advisers who are willing to re-tool and take on the retirement challenge is very real.

Skilling up on retirement

But servicing the retiree market is no mean feat. Retirement – or decumulation – is a complex stage of life. In fact, I recently heard someone say that the single biggest math problem we face today is the decumulation of assets saved by the baby boomers over last 30 to 40 years.

Whilst the accumulation phase has fairly known variables and, for many, is almost a set-and-forget approach, planning for decumulation is much more involved. In decumulation, the focus moves from the problems of fees or tax, to the more difficult task of forecasting a person’s liabilities against their assets.

Without the luxury of a regular income, you need to ensure assets are drawn down in a sensible and timely way. Assets become the income and the challenge is to deliver the right amount to the client in order to sustain them through every phase of their non-working years.

There is also the added issue of time. The old adage of ‘time in the market vs. timing the market’ no longer applies. All of a sudden, timing is everything. Advisers working with retirees must have a solid grasp of sequencing risk, inflation risk and longevity risk if they are to help retirees manage this stage of life successfully.

Creating a retirement advice offer

Advisers who want to create an offer for the retirement market need to develop a clear value proposition that answers the question ‘What’s in it for me?’ This value proposition needs to elevate the offer, positioning it above the many off-the-shelf or DIY solutions that are becoming more mainstream.

To do this, I believe advisers need to address four key questions:

How will you solve the complex math formula that surrounds decumulation in order to deliver your clients a sustainable income throughout retirement?

What technology can you use to streamline your offer and cost-effectively manage assets so that you have more time engage with clients?

How will you establish trust and transparency with your clients so they can be honest about their goals and challenges? And how will you continue to nurture these relationships so that they remain rock solid over the long-term?

How can you broaden your offer and shift your focus from returns to outcomes in order to deliver a more holistic service to clients?

An adviser who can create strong relationships with retirees and deliver successfully on a compelling value proposition, has the opportunity to become the trusted steward of their clients’ wealth. They may even take on a sort of CFO role for the family more broadly, supporting the next generation to make sound financial choices as their boomer parents move through the later stages of life. Baby boomers in the accumulation phase have been an important market for financial advisers in recent decades and there is every argument to suggest they will continue to be so as they move into retirement. 

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The content for the white paper has been prepared by Robert DeChellis, Consulting Retirement Strategist for Allianz Retire+. Information is current as at 27 May 2019. The views expressed in the paper are those of Robert DeChellis alone unless otherwise quoted, and do not reflect the views or policy of any company in the Westpac Group. The paper is for adviser use only and is not intended for and is not suitable to be delivered to retail clients (as that term is defined in the Corporations Act and related regulations). It does not take into account any personal objectives, financial situation or needs. You should consider its appropriateness having regard to these factors before acting on it. Any graph, case study or example contained in the paper is for illustrative purposes only, and is not to be construed as an indication or prediction of future performance or results. While the information contained in this publication may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, no company in the Westpac Group accepts any responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, companies within the Westpac Group intend by this notice to exclude liability for this material.