Why advisers hold the key to client peace of mind when it comes to retirement decisions
Retirement is often described in numbers: savings, investments, annuities, and income projections. But for clients, the decisions at this stage are deeply human. They carry emotional weight and long-term consequences that few are prepared to navigate alone. This is where financial advisers play a pivotal role, not just as financial and investment planning experts, but as trusted partners.
When clients reach retirement, legislation requires that two-thirds of their accumulated savings from retirement funds be converted into an approved income product. For many, this is the largest financial decision they will ever make. The choice between a living annuity and a life annuity, or a blend of the two, is not simply a technical one. It involves trade-offs between flexibility, certainty, growth potential, and legacy planning.
A living annuity offers more control and investment flexibility, but places longevity and market risk squarely on the retiree. A life annuity, by contrast, guarantees income for life, transferring these risks to the insurer. With hybrid solutions, such as the Retirement Income Option (living annuity) with the Guaranteed Annuity Portfolio (life annuity) as an optional underlying investment component from Momentum Wealth, clients can combine certainty with flexibility, reducing the stress of having to choose one or the other.
On the topic of behavioural biases, even rational investors struggle when faced with life-changing decisions. Loss aversion, overconfidence, and short-term thinking often derail sound planning. Clients may panic when markets dip, locking in losses and missing future gains. Others overestimate their ability to ‘beat the market’, ignoring longevity risk and inflation.
Advisers can counter these biases by reframing choices and simplifying complexity. A guaranteed annuity, for example, provides psychological comfort by removing ongoing decision-making pressure. There is no ongoing management required, and you don’t have to worry about making the wrong decision later in life.
“Retirement decisions are not just financial choices, they are emotional commitments that require trusted advice, clarity and confidence.”
