Holistic Advice Takes Off: The Runway To Real Retirement Success

The Australian retirement dream has a reality problem, according to Macquarie University Professor Joanne Earl. Sifting through Australian Bureau of Statistics (ABS) survey data, Earl – a noted expert on the psychology of ageing and retirement – and her research team stumbled on a puzzling fact.

“We noticed that there were a lot of people who were retiring in one wave of a survey and then were back out looking for work in the next survey,” she says. “So, this suggested that people were maybe leaving work at the wrong time.”

The ABS data found almost 200,000 Australians were back in the job market after their first attempt at retirement – most of them pushed by financial pressure (43 per cent) or pulled by boredom (35 per cent).

But rather than filing the ABS data as interesting, if non-actionable, evidence of retirement regret among older Australians, the research team decided to dig into it further.

Based on a review of psychological research on why people retire, including some of Earl’s own studies, the findings suggested that while financial status remains important, career, emotional, physical and social factors also play a significant role in workplace exit decisions.

“But when people are thinking about retirement, if they get advice, it’s usually financial advice,” Earl says. “And there’s no one to really kick around ideas about other aspects that might be playing into why it is they want to leave work or why it is they want to leave now.”

The insight triggered an idea for a new research project to determine if a more multi-disciplinary approach to retirement planning could better prepare Australians for life after work.

“We wondered what would happen if, instead of just getting people to get financial advice prior to retirement, we helped with career advice first, then offered some insights into their health status, before they sought financial advice?” Earl says.

“Would it make a difference?”

Confidence boost on combined health, wealth, career training

And the short answer is ‘yes’.

Preliminary results from the pilot of the Australian Research Council Linkage and Macquarie University-coordinated study “completed late in 2021 confirmed that guiding pre-retirees through a structured program covering career, health and finance made a measurable impact on their retirement-readiness.

The preliminary Macquarie research, carried out in partnership with academic experts from UNSW, UWA; in collaboration with Allianz Retire+, found the three-pronged advice approach left subjects more confident about retirement overall while boosting financial literacy knowledge.

Intriguingly, after completing the intensive three-module course – a mix of online and one-to-one advice activities – participants on average revised down their expected retirement ages.

In another significant preliminary finding, subjects in the pilot said they were more likely to consult a professional financial adviser after completing the modules.

Participants received a mixture of exposure to financial education, resources and professional advice as part of the finance component, which may have added to the general uptick in willingness to seek advice.

The program, too, has the potential to create engaged clients for financial advisers: those involved in the study generally emerged with a much clearer idea of what to expect from advice.

Earl says many Australians have little idea of even what questions to ask financial advisers about retirement planning.

Early results from the pilot study, however, suggest that the in-depth retirement planning module approach “really helps people to think more deeply, and reflect upon their individual situation, why it is they want to leave work and when”.

“You can hear those ‘aha’ moments, where people are starting to really consider what it means to retire and when they’re going to retire, beyond just the financials,” she says.

“But there was also a very big appetite for the financial information in the financial module. Finances in retirement can present a lot of unknowns or uncertainty for people”.

The pilot program has produced some promising results showing a holistic approach to post-work planning has benefits both for retirees and advisers, the project is now pushing ahead with a full-blown study this year that could see the concept take flight across the industry.

Study cleared for national approach

The follow-up project, due to begin this March, will broaden the geographical scope of the initial Adelaide-based pilot to the eastern states of Australia, including Tasmania.

While the pilot research yielded interesting results based on the experience of 100 or so subjects over a relatively short time-frame, the longitudinal study will track the progress of hundreds of participants over an extended period as they go through the holistic retirement planning program and beyond.

“We’re targeting people who are 50 and over and consider themselves still working, and who are contributing to a superannuation fund,” Earl says. “At this stage the project is not aimed at those people in a self-managed super fund, nor defined benefit members. These groups might be the focus of some future research”.

As per the pilot study, the upcoming research will also hinge on input from a range of financial advisers, subject to a few conditions as below – potential candidates:

  • must be listed on the ASIC adviser register;
  • have experience in dealing with retirement issues;
  • be willing to go through the training on the protocols of the holistic advice study; and,
  • have time to connect with study participants for a general advice session.

In addition to receiving a significant number of CPD credits, Earl says financial planners who take part in the study will likely gain insight into the value of holistic advice given the positive feedback from those in the pilot program.

“Having enjoyed the process, many of our financial advisers in the pilot seem to have got a lot out of the experience and wish to carry over into our main study” she says.

How advisers can get on board

Indeed, aside from building more detailed evidence on how holistic advice can improve retiree outcomes, the study is also targeted at developing an innovative approach to retirement planning training for financial advisers.

Earl says feedback from advisers taking part in the full research program will be essential in assessing how to translate the theoretical promise of the multi-disciplinary retirement planning program into a workable advice solution.

“Just building the holistic retirement planning model is not enough, it needs to be a model that translates into their practice” she says. “And we are interested in feedback on how well it worked for them. Are the pre-retirees coming to advisers better prepared; or showing greater engagement and willing to make better choices?”

Real retirement success

Earl says results from the pilot study indicate that a broader approach to retirement planning – covering health and career details as well as finance – may offer a real solution to ensuring people adjust to retirement.

The promising initial indicators found participants tended to have better knowledge about accessing their superannuation after going through the program, while also more willing to confront health issues “and perhaps giving themselves a reality check about when they may need to leave work”.

With an overarching design to help people better engage and gather a realistic view of their individual circumstances, at best, the study has the potential to increase confidence and spur active design of people’s individual retirement experience.

“This is a landmark study, with the potential to greatly impact Australians on an individual level, as well offering broader societal and economic benefits. It’s well worth deeper exploration”.

Financial advisers wanting to take part in the upcoming Macquarie University/Allianz Retire+ study can contact here: ThinkAhead@mq.edu.au

CREDIT: Original article written for Allianz Retire Plus.

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