Investors do not understand the extent of planning needed for retirement, according to BT Financial Group (BTFG).
While investors understand that the process of retirement is very different from the acquisition phase from an investment standpoint, they need a more comprehensive understanding of how much planning is actually required for retirement, the group said.
“I think people have an understanding of the things that differ when you’re putting money in to when you’re pulling money out but I don’t think they quite realise the extent to which that is true,” BTFG head of retirement Rodney Greenhalgh said.
“They are fundamentally different circumstances and that’s really why the way constructing portfolios does differ.”
Mr Greenhalgh said that having a poor market event can affect investors differently at different stages of their lives.
Investors nearing retirement have more money exposed and the impact of the market can often be harder to manage as they need to draw down from those assets when retiring.
He said that the impact of the global financial crisis made this resonate more with clients, but further stressing of this point is necessary.
“The focus on sequencing risk is getting a lot of airplay at the moment,” Mr Greenhalgh said.
“The other thing is that you have a lot more people who are in this particular situation so there is growing client interest there. The system has matured, so perhaps solutions for those people who are entering that phase need to develop as well.”
Mr Greenhalgh said that this focus on retirement solutions has led to an increase in BTFG’s Wrap Capital solution which provides income protection for investors.
“We’re still seeing that people are quite focused on the risks still, we’re seeing the need to invest in growth assets to extend the length of which their assets will last and to provide growth in their portfolio but investors want to understand how the risks are being managed.”
“One of the things we would like to build out is to provide access to even more funds, so I think the development in 2013 will really be about providing access to more funds that people use which they can select to get protection,” he said.
