Australian planning strategies weak on risk communication: Milliman
|
|
Financial planning strategy frameworks in Australia do not appropriately communicate risk, or account for full value through the wealth management lifecycle, according to consulting and actuarial firm Milliman.
Sydney practice leader Wade Matterson said recent market conditions and a shift away from asset accumulation to the development of income streams by baby boomers has highlighted these flaws.
“Australians in retirement and those planning for retirement are being exposed to increased risks due to changing demographics and continued market volatility, but the market has been slow to recognise and act upon the needs brought on by these changes.”
However, Matterson said continued pressure on the financial planning community would “create incentives” for the development of a holistic financial planning framework.
“We anticipate that the movement towards fee-for-service models, combined with the trend towards limited advice offered by superannuation funds, will force planners to reassess their approach.”
The natural outcome of this will be that financial planning frameworks evolve to cater for the wealth-management lifecycle of an individual.
“The challenge is to find an approach that can engage people early in planning for a retirement that may be 20 or 30 years away.
“A framework that incorporates current assets with future earnings (human capital) will demonstrate the impact that early planning can have on retirement outcomes.”
Recommended for you
The director of Ascent Investment and Coaching, Michael Dunjey, has been charged with 33 criminal offences.
Adviser Ratings’ latest financial landscape report finds there is a demographic of advice practices achieving an average revenue of $5 million, with only 3 per cent of practices overall seeing a revenue decline.
The FAAA is calling for regulators to take a partnership approach with financial advisers regarding incoming legislation, rather than treating the industry as “guinea pigs”.
There have been strong numbers of returning advisers this year so far, according to Wealth Data, already surpassing the same period for 2024.
