The Investment Trends 2015 Retirement Planner Report, based on a survey of 591 financial planners, indicated that in the 12 months to October 2015, financial advisers placed only 16 per cent of their new retiree client flows into cash and term deposits, which was down from 22 per cent in the previous year.
Recep III Peker, Investment Trends’ head of research for wealth management, said that in order to add value for pre-retiree and retiree clients, especially in this high-volatility and low-interest rate environment, financial planners are reducing their flows into safe haven investments such as cash and term deposits “in favour of more sophisticated products”.
“Annuities, diversified funds and income funds will continue to be the winners as planners seek higher yielding, diversified investments.”
Annuities and outcome-based funds in particular will see increased usage, according to Mr Peker.
The number of planners who advise on annuities, based on the survey, has increased from 32 per cent in the 2013 survey, to 41 per cent in 2015.
Mr Peker credits Challenger for the product’s growth in popularity.
“Planners are becoming proficient in recommending annuities, with more finding them easy to understand and use,” he said.
“Client awareness of the Challenger Annuities brand has also contributed significantly to planners’ ability to recommend annuities, helping to grow the market”.
The survey also showed that 84 per cent of planners are seeking assistance from product providers to better service their pre-retiree clients.
According to Investment Trends, advisers are commonly looking for online tools and calculators ahead of education and awareness initiatives.
“Planners want product providers to equip them with the necessary tools to engage their pre-retiree and retiree clients,” said Peker.
“Having the right products is important, but these need to be backed with interactive tools and calculators that planners can use alongside their clients.”
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