Financial advice in retirement - a real value add

The value of financial advice is a tricky thing to quantify. Certain elements are measurable against investment performance while others are more behavioural aspects and therefore less quantifiable.

A study by T. Rowe Price found that investment selection is the most important aspect to people who pay for advice. Retirees value investment selection and asset allocation the most, whereas people still working value retirement and tax planning more.

For retirees, financial advice around choosing underlying funds and making asset allocation decisions aligned to a broader retirement plan can be a critical success factor. To quantify this, we looked at a few of South African’s largest LISPs (Linked Investment Service Providers) and analysed their pre- and post- retirement books (in other words the underlying investments according to ASISA categories of retirement annuities [RA] and living annuities [LA]). From the research and historical returns, we estimate that de-risking at retirement can result in an investor losing out on 28 months of retirement savings because their total return  could likely be some 0.8% lower than if they had not de-risked.

We share some considerations around maximising the value of financial advice for retirement planning.

Read full article: https://www.mandg.co.za/insights/articlesreleases/financial-advice-in-retirement-a-real-value-add/

October 03 2023 By Sumayya Davenhill - M&G Investments