Financial advisers are key to retiree clients happiness and overall wellbeing and need to incorporate drivers of satisfaction into the advice process.
Consulting partner at research house MYMAVINS, Jason Andriessen, spoke at a Portfolio Construction conference on a study in partnership with Fidelity and said happiness had two aspects: short-term joy and long-term satisfaction.
Financial advice, he said provided the short-term benefit of the feeling of being in control of things such as when to invest, what to invest, how much to invest, how much to draw on, when to spend, and so forth.
“Financial advisers, work with clients to understand what's important to them and help them achieve that,” he said.
“That provides a sense of confidence and builds competence which is the main driver of confidence. That all manifests in a feeling of positivity in the short-term.”
Andriessen said the top factors that drove life satisfaction in retirement were emotional experience, competence, purpose, and a feeling of control. These were deemed more important than health and wealth.
“We know from this study that respondents who are currently advised have better competence, when it comes to financial matters, more confidence, more resilience, they feel more in control, they suffer from less financial stress, which is the first step to happiness, and they feel happier overall. So that that is a clear relationship,” he said.
Andriessen said the industry needed to start designing advice processes and portfolio construction decisions around this positive emotional experience as it was the number one driver of wellbeing in retirement.
He noted 90-page statements of advice taught learned helplessness and that it was better to take into consideration how people behaved and how they changed behaviour.
“When we create new habits, we embed behaviour change the build we feel successful and we have more competence which provides us with more optimism for the future which provides positive emotional experience and happiness day-to-day,” he said.
“It is clear from this study that financial advisers are absolutely key to their clients to their retiree clients happiness and overall wellbeing.
“That fact means they need to take action because promoting happiness is their obligation so we need to be incorporating these drivers of satisfaction into our hats of utility that we wear as professional advisers and incorporate these factors into our advice process and portfolio construction decisions.”