Decumulation is one of the biggest challenges both clients, and financial advisers face, it is a daunting time for clients as they transition from building their wealth to withdrawing it. Meaning it is imperative that a client feels supported and more importantly empowered.
Over recent years, advisory firms have begun to call for change, especially the decumulation phase, saying that this needs to be reimagined.
Decumulation is Different
Instead of planning a year or two before retirement advisers should be starting those conversations five to ten years before retiring, as it allows more time to accumulate more effectively, therefore having a more significant impact on the overall portfolio.
To aid this, financial advisers need more than a simple straight-line projection tool to help build a sustainable retirement journey. Instead, taking a look into the past can help plan for the future and offer reassuring advice when faced with evidence-based data.
It isn’t just advisers who stand to benefit. Clients need simple withdrawal strategy visual’s that explore life choices and their potential impacts. With the correct tools, an adviser can take things one step further by inviting clients on a journey which offers transparency and understanding from the off. A live environment with the ability to factor in and better understand future spends (weddings, holidays, life changes etc.) empowers clients to build their retirement journey with the security that their portfolio will outlive them.
Advisers and Clients Find Synergy Through Technology
The future of decumulation advice must involve the adviser and client working together. The client can share their held-away assets, income, and expenses securely through open banking, reducing the traditional time-consuming fact-finding journey. This gives a real-time view, and full transparency of the plan the adviser and client have created together.
Innovative use of technology can take advantage of back office integrations and MorningStar API’s to build the value chain. Rather than a static, annual review, the advice relationship can be supported in real time with a system that reassesses the retirement income sustainability on a weekly basis, providing ongoing monitoring and more importantly, security. Setting actionable alerts allows advisers to ensure all client plans are kept on track, this shows clients their best interest is constantly at the forefront. This simultaneously gives the adviser an audit-trail of income sustainability for compliance and regulatory purposes.
Clients need financial advisers to help them make logical and reliable financial decisions in line with their retirement goals, to do that advisers need to build their clients’ trust. The key to improving this relationship is transparency. In today’s climate, it is more important than ever for financial advisers to equip themselves with the most practical and ever-evolving tools; to then be able to communicate this effectively to ensure clients fully understand their choices. This way, the two can work in unison to create an accurate, elegant and sustainable retirement journey.
If all of this sounds futuristic, then you will forgive me if I smile when I say, the future has arrived.