Drawdowns, drawbacks and disruption
Retirement income planning demands resilience of advisers who have an arsenal of tools and products to draw from
We cannot deliver the retirement solutions of yesterday to the clients of today and tomorrow. This weighty thought underpinned the Glacier IdeasLab 2019, held in Cape Town, Johannesburg, Pretoria and Durban from 20 to 23 August 2019. Experts from multiple industries presented their insights around retirement income planning to the 500+ intermediaries who gathered at the four events.
Multiple challenges…and solutions
Lesley-Ann Morgan of Schroders, UK, sketched a worrying picture of retirement income planning in South Africa, set against a global backdrop. While innovation and government financial protection of the aged and the ageing seem to define the strategies in the UK and Australia, South Africans are left wanting. We tend to start to save too late – that’s the message echoed by almost every presenter. As a result, 47% of people wish they had more income at retirement. Very few retirees are taking that long-awaited cruise, it seems, and the basics of living – food, clothing, utilities – account for 59% of a retiree’s income compared to the 37% they expected it would be when they started on their retirement savings journey.
Morgan attributes this picture to myriad investment factors, such as:
economic forces (such as lower GDP globally),
disruptive factors (such as regulation, technology and geo-politics); and
investment challenges (such as unrealistic return expectations, lower returns, and people’s extended lifespan, generally).
Despite this depressing reality and the threat of increased volatility, Morgan says that intermediaries and investment professionals have a role to play in mitigating the impacts of low investment returns. Dynamic asset allocation involves making long-term investments in certain asset classes or securities.
“Stock selection works well at times, and so does asset allocation,” she said, “but dynamic allocation is important in retirement income planning. Equity is not always the villain or the hero. Diversification can help, but the ability to move between classes is what counts”.
Trust, tools and training
Werner Lotriet, head of Distribution and Sales, outlined Glacier’s value proposition for intermediaries. Lotriet says that a resilient retirement income plan is designed by an intermediary who:
partners with a trusted brand with a proven track record;
has access to innovative tools, solutions and products;
has access to ongoing support and technology training, enabling seamless processes for clients; and
has access to depth of knowledge and research.
Lotriet emphasised Glacier’s commitment to enabling practice management through tools such as the Glacier Retirement Income Planner, which helps advisers design the most suitable retirement income solutions for their clients. This tool is just one in the Glacier arsenal and among others:
helps to illustrate and compare combinations of solutions;
takes into account tax scenarios; and
allows for real-time sharing with clients.
The Glacier Retirement Income Planner forms part of an intermediary toolset available on the Glacier Investment Hub. Training on all of the tools is part of Glacier’s service to intermediaries.
“Our tools are designed to simplify processes, save time, and enable delivery of world-class solutions and service to clients,” he said.