Three-quarters of financial advisers consider retirees and pre-retirees as central to the growth of their practice in the next two to five years, but only around one-third run investment strategies designed for clients in that stage of life, according to Zenith Investment Partners.
The investment research and managed account provider made the statement in its “From Adoption to Advantage 2026” report, based on a survey of 430 Australian advisers, which found 75 per cent of advice practitioners rated those heading into retirement or already retired as very or extremely important to future practice growth.
Additionally, 57 per cent stated intergenerational wealth transfer was a priority, but only 31 per cent of those using managed accounts had a strategy specifically designed for clients in the decumulation stage, despite 90 per cent of practices stating they already had members of that cohort on their books.
Furthermore, only 26 per cent of practices had specific strategies for engaging adult children who will inherit their clients’ portfolios, with about 50 per cent planning to create one and around 20 per cent having no plans to do so.
Zenith Investment Partners head of portfolio solutions Andrew Yap said advisers had identified growth areas, but not the methods to service them.
“Advisers can see exactly where their next five years of growth is coming from. It’s the client in front of them today moving into retirement and it’s the children who will eventually inherit what’s left,” Yap said.
“What this research shows is that many practices are not yet set up to provide a distinct investment approach for clients already drawing down or having a clear plan for engaging the next generation.
“You can’t build a growth strategy around a client base you’re not properly set up to serve.”
He noted larger practices were ahead in engaging the children of clients and of those managing 300 or more clients, 29 per cent already had strategies in place, compared with 20 per cent of moderate-sized operations.
At the same time, many practices looking to grow were using managed accounts as their default operating model, with Zenith’s research finding 91 per cent of businesses with a majority of client funds in that type of investment vehicle reported a positive impact on client outcomes and satisfaction, compared with 64 per cent of those who have only adopted the structure lightly.
“The advice practices best positioned for what lies ahead are the ones treating retirement income needs and the intergenerational wealth transfer as distinct disciplines, rather than extensions of what they already do,” Yap added.
“That means advisers need a genuinely different investment approach for someone living off their portfolio and it means bringing the next generation into the room years before they inherit anything, rather than scrambling to build a relationship with them after the fact.
“The advisers seeing the strongest results are those who have committed to managed accounts and are using them to strengthen their retirement and next-generation strategies.”
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason