Retirees huge client source for advisers

Financial planners can expect more demand for advice and limited advice distribution channels from a growing pool of retirees’ assets, DEXX&R research found. 

The DEXX&R Market Projections Report showed total assets held in the retirement incomes market are estimated to grow from $454 billion at December 2013 to $894 billion in December 2023. 

“For the past 25 years the provision of advice to those nearing or in retirement has been the largest single source of income for financial planners,” the report said. 

Self-managed super funds (SMSFs) hold $294 billion (65 per cent) in total retirement incomes funds under management (FUM), while retail allocated pensions hold $149 billion (33 per cent), and annuities hold $11 billion (2 per cent). 

By 2023, this is estimated to rise to $508 billion in SMSFs (57 per cent), $366 billion held in retail allocated pensions (41 per cent) and $20 billion held in annuities (2 per cent). 

“In addition demand for advice will increase from retirees with SMSFs once they reach the point that they no longer wish to actively manage their investments, and their account balance falls to a level where a retail allocated pension offers a more cost effective option than the fixed costs incurred in running an SMSF,” the report said. 

These retirees may also look to fixed income annuity as a source of income through to death. 

Total FUM held in both the accumulation phase and pension phase in SMSFs are estimated to rise from $543 billion at December 2013 to $922 billion by December 2023. 

The total superannuation market is set to rise by an average annual growth rate of 7.8 per cent to $2,998 billion at December 2023. 

DEXX&R took the May 2014 Federal Budget into account before arriving at these figures.