Expert: Claire Felgate, Head of International, Global Consultant Relations, GSAM Facilitator: Roderic Rennison, Catalyst Partners
Headlines:
- The industry faces significant challenges in delivering suitable retirement income solutions, particularly for the mass market
- A shortage of advisers is leaving many nearing retirement without access to personalised guidance
- Algorithms, risk questionnaires, and cash flow modelling tools are helpful but have limitations in offering the personalised advice retirees need
- A broader view of income sources beyond pensions is crucial for effective retirement income planning
- Mixed client awareness on ESG investing and the unique retirement planning needs of women were highlighted as key areas for improvement
Discussion Points:
Retirement income solutions and the advice gap
The delegates discussed the complexity of retirement income products and how the industry struggles to provide comprehensive solutions, especially for clients with modest pension pots.
The advice gap was a key concern, with a limited number of advisers available to meet the growing demand from those nearing retirement.
While technology, such as algorithms and risk questionnaires, was seen as a potential solution to automate some advice processes, concerns were raised about the lack of personalised, tailored advice that considers individual circumstances.
Cash flow modelling and investment solutions
The role of cash flow modelling tools in retirement planning was explored. Delegates shared their experiences, noting the need for consistency and realistic assumptions when using these models.
The group also explored investment solutions designed specifically for retirement income, discussing the need for innovation in this space to better cater to client needs.
Solutions such as annuities or drawdown strategies were raised as potential avenues for clients with modest pension pots, but the consensus was that innovation is required to offer flexible, adaptable solutions.
ESG investing and gender considerations
ESG (Environmental, Social, and Governance) investing was another key topic, with delegates offering mixed opinions on client awareness and interest in these principles. While some clients show interest in ESG factors, broader education is needed to raise awareness.
Gender considerations were also discussed, particularly the unique challenges women face in retirement planning, such as smaller pension pots and longer life expectancies, which require tailored approaches to address their specific needs.
Challenges and opportunities in the industry
The group acknowledged the broader industry challenges in providing suitable retirement income solutions, including regulatory hurdles, the complexity of products, and the need for better client education.
Collaboration and innovation across the industry were seen as critical steps to close the advice gap and deliver more accessible, understandable, and personalised retirement planning solutions.
Key takeaways:
- Technology (e.g., algorithms, risk questionnaires) can help automate certain aspects of retirement advice, personalised advice remains essential to address individual needs effectively
- Retirement income planning should go beyond pensions to include other income sources and strategies
- There is a growing demand for ESG investing, but the industry needs to focus on educating clients to increase awareness and engagement
- Women’s retirement planning requires more attention due to the unique challenges they face, such as longer life expectancies and smaller pension pots
- Industry-wide collaboration is necessary to innovate and address the advice gap, ensuring that retirement income planning is more accessible and effective for a diverse population
