Advisers’ retirement investing framework unstructured

While the bulk of most advisers’ clients are retirees, advisers’ investing frameworks for retirement are often unstructured, according to Fidelity’s head of client solutions and retirement Richard Dinham.

Speaking to Super Review, Dinham said research by the investment manager found that many advisers had not received education on retirement investing as it was not part of the Certified Financial Planner (CFP) syllabus.

“There is nothing in the syllabus that specifically covers investing frameworks for retirement. Super was created for saving for retirement, and the bit that comes after you retire wasn’t thought about then and hasn’t been thought about much up until now really,” he said.

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“Super was geared up for savings and accumulation and not decumulation and retirement and this is the same for the framework regarding retirement products.

“A lot of strategies that planners think about are around accumulation and not the bit that comes after. That’s not to say that advisers are not doing a good job but it’s a bit unstructured.”

Dinham noted that the CFP was a high-quality professional qualification as it was detailed and thorough but retirement investing was not covered in detail.

“We did a survey of what people do in terms of their retirement investing framework and we found a whole variety of frameworks being used such as bucketing and conservative allocations. There were about five or six different frameworks for retirement investment advice,” he said.

“While most of them have a way of doing retirement strategies they’ve come to use it for a particular approach and may not be aware of other approaches that exist.”

Dinham said advisers’ biggest concerns for retirees currently were on finding income and said advisers and clients needed a plan they could stick to that could cope with the inevitable uncertainties.

“A lot of advisers have a bulk of their assets under advice for retirees and retirees are more risk averse, but they still need to take risks, if they don’t they’ll have subpar outcomes in the medium to long term,” he said.

“The investment plan needs to be structured to allow for market volatility and they can also take advantage of longer term risk premiums to be used for clients’ benefit.”


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