The seven friction points of retirement advice

Let's talk about the big changes happening in the world of retirement. There's a growing demand for more personalised and secure retirement solutions, and it's shaking things up quite a bit. 

This shift is driven by a few key factors: the rising popularity of direct share portfolios, a deeper understanding and trust in financial products and the ongoing conversations within the industry about how to best address retirement needs during this great wealth transfer.

Common friction points with financial advisers

Retirees often face several friction points when working with financial advisers. Addressing these issues can significantly improve the adviser-client relationship and enhance financial security.

Here are some common friction points we've come across over the years and suggestions on how to eliminate them:

1. Complexity and jargon
   
   
• Friction point: Financial products and advice can be filled with complex jargon that retirees find difficult to understand.
  
  
• Solution: Simplify language and use clear, straightforward explanations. Providing educational resources and visual aids can also help clients grasp complex concepts more easily.
  
  
2. Conflicting advice
   
   
• Friction point: Retirees often receive conflicting advice from different sources, leading to confusion and distrust.
  
  
• Solution: Focus on building trust by being transparent about recommendations and the rationale behind them.
  
  Encouraging open communication and addressing any concerns or questions retirees have can help build a stronger relationship.
  
  
3. Lack of personalization
   
   
• Friction point: Generic advice that doesn't consider individual circumstances can be frustrating for retirees.
  
  
• Solution: Take the time to understand each client's unique financial situation, goals, and preferences. Tailoring advice to meet these specific needs can make retirees feel valued and understood.
  
  
4. High fees and costs
   
   
• Friction point: High fees and hidden costs can erode clients' trust and financial security.
  
  
• Solution: Be transparent about fees and any associated costs. Offering a clear breakdown of services and their value can help clients see the benefits of the advice they are receiving.
  
  Using a portfolio of direct assets, shares, term deposits and listed investments work well to help curb the costs.
  
  
5. Inadequate communication
   
   
• Friction point: Infrequent or poor communication can leave retirees feeling neglected and unsure about their financial plans.
  
  
• Solution: Establish regular communication schedules and be proactive in reaching out to clients. Providing updates and being available to answer questions can help them feel more secure and informed.
  
  
6. Overly conservative or aggressive strategies
   
   
• Friction point: Sometimes clients are recommended investment strategies that are either too conservative – with too much sitting in cash not doing anything – or too aggressive, such as when portfolios haven’t been reviewed and stuck in a top draw, not aligning with their risk tolerance. 
  
  
• Solution: Conduct thorough risk assessments and ensure that investment strategies align with clients' comfort levels and financial goals. Regularly reviewing and adjusting these strategies can help maintain alignment, ensuring that clients understand the value of quality assets without taking massive risks. 
  
  
7. Lack of empathy and understanding
   
   
• Friction point: Clients often feel that their advisers do not fully understand their concerns or emotional needs.
  
  
• Solution: Practice active listening and show empathy towards clients' concerns. Building a relationship based on mutual respect and understanding can foster a more positive and productive partnership.

Understanding and trust: the cornerstones of retirement planning

Trust and understanding are crucial in the context of retirement planning. Clients need to feel confident that their advisers and the strategies and solutions they recommend are reliable and aligned with their long-term goals.

This trust is built through transparent communication and a clear demonstration of how different investment options can meet their specific needs. Our industry is increasingly focusing on educating clients, helping them understand the complexities of various strategies and how they can be tailored to their unique circumstances.

By addressing these friction points and building empathy, we've found that advisers can create a more supportive and effective environment for clients, helping them achieve their financial goals with confidence and peace of mind. 

After all, our clients – especially retirees – are primarily seeking certainty and confidence in their financial future. They want to know that they can maintain their lifestyle and pursue their interests without the fear of running out of money.