Rethinking retirement advice: shifting from balances to behaviour

As Australia’s retirement cohort grows larger, lives longer and faces a more complex economic backdrop, advisers and industry leaders at a recent North retirement philosophy roundtable agreed that retirement advice is undergoing a fundamental change.

It’s shifting towards a more holistic, lifestyle-focused framework that prioritises certainty, sustainability and client behaviour. 

Running out of money during retirement is front of mind for many Australians, an adviser’s role is shifting from portfolio manager to behavioural coach – helping clients feel confident not just in their investments, but in their retirement decisions. 

North utilises the SMILE risk framework and the 5Ls within its retirement philosophy to support this shift. 

“The SMILE risks are sequencing, market, inflation, longevity, and emotional risks, and I’ve added an R on the end – regret," said AMP Director of Retirement Ben Hillier. 

“That is the balances left unspent. Sometimes that’s people’s intentions, but the research tells us clearly that most of the time it’s not. You don’t want your clients to have regret.” 

Many advisers at the North roundtable said many clients and traditional frameworks may underestimate how long retirement can realistically last. 

“People are living longer and longer now, but what’s important is the gap between life expectancy and good health, which is still quite large,” said Melody Edwards, Senior Financial Adviser at Evalesco. 

“You don’t really want to be  worried too much about being able to afford good care, and sacrifice what you’re doing in your good health years. Addressing that early can alleviate the worry about spending too much now when they might need it later.” 

North’s 5Ls methodology addresses these concerns by offering a framework that incorporates liquidity, living, lifestyle, later, and legacy into retirement planning. 

“Having perhaps more enriching retirement conversations is deliberately having to look at each need individually, having strategies to target each of those,” Hillier added. 

Spectrum Wealth Partners’ Ashley Tilston said his firm has implemented a similar system that tries to understand what clients want their impact and legacy to be. 

“What is the impact you want to make while you’re alive? What is the impact you want to have in your own life? It means different things to different people,” he said. 

According to Shannon Freney from Direct Wealth, a simple but powerful reframing can change everything. 

“I think the biggest thing when trying to break through the ‘I don’t want to spend’ or ‘I don’t know if I can retire’ is really bringing [them] down to what their actual values are and that behavioural finance side of things,” Freney said. 

“It is really just about, what are we actually trying to achieve here? And some of the questions that I think have actually gotten a lot of retirees thinking is, ‘rather than setting money aside for your kids, why don’t we make sure you’re good, and then you can help them with your wealth from there?’. 

“For so many of them it clicks and they realise it doesn’t have to be set aside and they can’t touch it ever again.” 

That’s the mission behind MyNorth Lifetime, to help people maintain their lifestyle while enjoying retirement, Hiller added. 

As retirement advice continues to evolve, the roundtable made one thing clear: the future of retirement planning is changing, and advisers need to deliver confidence and clarity to their clients. 

Discuss North’s retirement solutions with Ben Hiller and learn how our new Retirement Modelling Tool will enable future client wealth projections and seamlessly illustrate the impact of innovative retirement income streams for their desired outcomes. 

All this and more at North 26.