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Retirement planning has to start somewhere: FMA

It is difficult for people nearing retirement to get access to the financial advice they need, it has been argued.

Thursday, August 13th 2015, 6:00AM 2 Comments

by Susan Edmunds

Simone Robbers, the Financial Markets Authority's director of primary markets and investor resources, and David Boyle, group manager for investor education at the Commission for Financial Capability, fronted media yesterday at a press conference to discuss their recent report on New Zealanders' retirement experiences.

The research showed that a large number of New Zealanders over 50 did not have a financial plan in place for their retirement.

Those most likely to have a plan were those who thought they already had the money to live the sort of lifestyle they wanted in retirement, those over 60 and those with annual household incomes over $30,000. Retirees with a financial plan tended to have a more comfortable retirement.

Robbers said whether those nearing retirement drew up a plan with an adviser or whether they did it alone was secondary to the act of planning itself.

She said New Zealanders "needed to start somewhere". For some, that would mean going straight to an adviser. Others might work through other tools first. "Both starting points are good and better than what we are seeing at the minute."

But Boyle said a key issue was where New Zealanders could find advice and whether they would pay for it. "It's hard to get good factually-based information, let alone advice."

He said adviser businesses had traditionally been geared up to deal with those who already had a significant lump sum saved, but New Zealand also need to think about the needs of accumulators, and develop a better framework to do that.

Robbers said New Zealanders needed to be encouraged to seek advice and consider a lump sum, such as from KiwiSaver, as a way to generate income.

Boyle said he had challenged KiwiSaver providers to think about ways they could provide a better service to those nearing retirement. "At the moment you get a letter from IRD saying you are eligible for NZ Super and then maybe at the same time you get one saying you have got this lump sum, what do you want to do with it? I think we can do better. Don't send out a letter three months before they hit 65, think about message and ideas at 50 to act as a catalyst."

A little bit of financial planning could go a long way, Robbers said. "But tools need to be easy to access and easy to find."

ANZ, the largest KiwiSaver provider, said it provided free financial planning services to its members.

But ANZ Wealth General Manager Products and Marketing Ana-Marie Lockyer said few took advantage of it.

Tags: Commission for Financial Capability decumulation FMA retirement

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Comments from our readers

On 13 August 2015 at 10:03 am traveller said:
Old hat; how many times have we been down this same track in the last few decades?
On 17 August 2015 at 11:23 am Dirty Harry said:
To be fair, Traveller, This is Robbers and the Commission for Financial Capability's first time.

Last time we went there the commission had different people, and a different name. And the time before that, there were different people and a different ministry. And the time before that it was different people, and a different department.

So, really, this is a great new initiative with great new ideas and a real focus on the problem, and you shouldn't be so darn pessimistic.

I just don't understand why Boyle thinks advice is so hard to come by. I thought all cities, and most towns have advisers who are ready and waiting, and if nothing else the punter could walk into any bank and make a start. Once again the FMA staff's own preconceived ideas shine through. Advisers can and do work with "accumulators" and often find the public perceive that they need to first accumulate a lump sum before seeing us - it's just not true.

The reality is everyone needs it, but the ANZ says people don't want it, even if it's free, and my own experience is some will pay for advice, but not many.

It's nice to see Robbers say the public "...needed to be encouraged to seek advice..."
Well, yes. So... will you? Will the FMA? Will the CfFC? KS is 8 years old. It's time to move from "should" to 'the public "ARE" being encouraged'.

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