How new retirement solutions can increase client engagement

Innovative retirement income streams are helping advisers stay closer to their clients for longer.

Australians approaching or in retirement are facing a wall of worries. Cost of living. The family home. Complex rules. Fear of running out (FORO). 

The need for an adviser to help guide them into and through retirement has never been higher. 

You can help them build a large enough nest egg so that FORO fades away. You can help them balance their retirement lifestyles with their sense of obligation to their families. And you can help them understand there’s no need to live in ‘lifestyle deficit’.

That takes education, including on newer options like innovative retirement income streams (IRIS).  

Enter stage left - new IRIS solutions

Savvy advisers are rapidly adopting IRIS – a new category of retirement income solution that can improve Age Pension outcomes and deliver an income for life. 

The Government prompted the development of IRIS to boost retirees’ confidence to spend more of their super savings¹ without FORO.  

But there’s also an added benefit that advisers are reporting – increased client engagement. 

5 ways IRIS can benefit you and your clients²

• Allow you to engage your clients earlier for retirement planning (IRIS strategies can commence at any age). 
• Provide an income stream for life. 
• Potentially boost Age Pension entitlements with discounts on assets and income tests. 
• Some offer a full platform of investment options so you can tailor client portfolios to suit their risk profiles. 
• Flexibility to fund retirement using lumps-sum withdrawals with a nil income test for advanced Centrelink strategies. 

Note: an IRIS can restrict access to capital which is why they’re typically used alongside an ABP  

An adviser’s story | Engaging with clients every step of the way  

Justin Hyland, principal of Sydney-based Hyland Financial Planning*, is using MyNorth Lifetime, an IRIS, to attract clients at different stages of their life journey. 

He says, “Many of our clients have some eligibility for Centrelink benefits but with every dollar over the asset test threshold reducing pension eligibility by $3 dollars, the opportunity to reduce assessable assets represents extraordinary value”. 

“Clients typically tell us, ‘We should have set this up years ago’. And this is one of the best affirmations of good work.” 

Justin says MyNorth Lifetime is helping to regenerate his client base. “Like many advice firms, we have been exploring ways to engage an ageing client base, who are coming to the end of their strategic advice cycle. At the same time, we recognise the need to grow clients across the 40–50-year-old demographic.” 

“North also helps to address the issue of growing a younger demographic of clients. We know older clients recommend us to their adult children. This can be the start of conversations with younger clients around preparing for retirement,” says Justin. 

“Younger clients are rarely excited by future Centrelink entitlements but modelling the outcomes of early adoption of an innovative product can tell a powerful story, and we are seeing traction in our younger clientele which helps to build the longevity of our client base.” 

3 ways you can take clients on the retirement journey 

1. Gauge their attitude to risk – an IRIS can take care of longevity risk but that still leaves sequencing and investment risk. 
2. Educate them about how the Age Pension and account-based pension can work together before introducing IRIS as a way to potentially boost their Centrelink entitlements. 
3. Find out more about their plans to bequest their money – do they want to gift some money earlier or would they prefer to wait? 

Confidence that shows... 

Knowing that income is guaranteed to last for life³ can be the catalyst that sees clients start to relax and enjoy their retirement rather than being unnecessarily frugal. 

“We are seeing MyNorth Lifetime Income account members spend 50% more than they used to – and this uplift is being driven by three separate factors”, says AMP Director – Retirement, Ben Hillier. 

“First, MyNorth Lifetime pays income rates that are significantly higher than account-based pension minimums.  

“Second, the strategy can enable increased access to the Age Pension.  

“Thirdly, our Lifetime members have increased their drawdown from their remaining account-based pension”, Ben says.