Adviser business models ‘must adapt’ to clients’ complex retirement needs

Jenna Brown reports

Advisers need to overhaul and update their business models to adapt to changing demographics of retirees whose financial make-up is becoming more complex, delegates heard at PA360 Digital on Wednesday morning.

Speaking on the first morning of the PA360 conference, being held virtually for the first time, Canada Life’s John Chew said advisers must adapt and change to service different types of retiree.

The pensions, tax and estate planning consultant said the typical babyboomer retiree, with defined benefit pension and no financial stress, would become a smaller chunk of adviser’s business in the coming years.

Chew said in his presentation: “There are 16.6 million over 60s at present. In 15 years’ time that will grow to 20.9 million.

“The key growth area is going to be in complex families and late financial bloomers. These are the biggest target markets. Babyboomers will decline.”

He quoted recent research from the provider that said as demographics change two emerging client types would become more dominant. Financially mature and stress-free retirees would give way to clients with “complex families and complex finances” and those dubbed “later financial bloomers”.

Chew said clients with complex families would typically be in their second marriages, and could have both parents and children to deal with and face different demands on their retirement planning, such as the potential use of equity release to fund care home fees or to help their offspring get on to the property ladder themselves.

“These are the squeezed middle, they are thinking about how to look after their parents but also how do they help their children at the same time.”

He later added that financial bloomers were the millennials of today who would marry later, buy a house later and therefore have less time to accumulate wealth though they would be high earners. He also said this group may transition into retirement in a different way through part-time work as they could have to service a mortgage until later in life.

All of these demographic shifts, he said, meant advisers needed to “shape and change” their business models accordingly.

Chew also highlighted two other emerging groups – the healthy but not wealthy and the unhealthy and not wealthy – though said neither would be target markets for financial advisers.

All PA360 Digital sessions will be available on-demand shortly.