Actuarial firm Milliman says it is working on a solution to help Australian advisers solve the retirement dilemma for clients.
The group has recently launched a tools and services package in the US that includes a web application called PlanAhead for Retirement that “serves as a single destination for all of a participant’s retirement planning and investing activities”.
Senior consultant and leader of Milliman's Australian Financial Risk Management practice, Wade Matterson, told ifa that the firm is working on a similar solution for the Australian market but that each market needed consideration for specific local aspects. “Wrinkles exist in Australia that need taking account of,” he said.
Advisers sailed through the 2000s on the back of strong investment markets and may have tended towards an asset management focus rather than taking a strategic view. But now “there will be blowtorch applied to how advisers justify their value,” he added.
Unfortunately the tools advisers currently have access to are not particularly sophisticated and are not well suited to talking in the language clients need, such as “how can you help me achieve a particular goal or objective I set for myself”, Matterson said.
To be able to do that well is difficult and in many respects is a complicated actuarial problem, with a variety of uncertain scenarios such as what markets will do, he said.
“You need an approach capable of capturing that uncertainty, [taking into account] what asset markets might do, capturing the behavioural aspects in terms of whether people may contribute more to super or take extended breaks through their working careers,” he said.
“The layer on top of that is the fact that there’s no single goal that people are really aspiring to; they have a multitude of goals they want to achieve to reach financial security. Those goals and objectives are typically a trade off against each other.”
Matterson described it as “a huge optimisation problem” in a mathematical sense, adding Milliman was trying to utilise its actuarial experience through its work with the advisory community and super funds to come up with a better proposition.
“We’ve already developed the analytical models to deliver a lot of this, we’re working with some clients already to roll this out,” he said. “We see this pure analytical approach as filling a whole bunch of gaps in the market, whether that’s through advisers or institutions.”
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