How advisers can bridge the ‘missing middle’ in retirement

Speaking with ifa, Aaron Minney, head of retirement income research at Challenger said that while traditional, sole-practice advisers continue to focus largely on higher-balance clients, scale-driven advice businesses and larger licensees are beginning to leverage technology to deliver advice more efficiently and profitably across a broader client base.

“If you’re a traditional sole practice adviser, you’re probably focused on that higher-balance member because there are a lot of fixed costs in running a client at the moment,” Minney said.

“They're probably not going to address that missing middle because it's just not worth their while.

“But when you get into the bigger shops, some of the licensees and some of the super funds trying to help their members, you're seeing advisers that are taking on integrating digital solutions.”

Minney pointed to the growing collaboration between advice firms and digital platforms as an example of how hybrid models can scale human expertise

“That’s how you start addressing the missing middle — by using technology to extend the reach of advisers rather than replace them,” he explained.

Minney likened the evolution of advice models to choosing between off-the-rack and tailored clothing.

While standardised or “cohort” solutions can offer accessible entry points for clients, he said advisers remain essential for helping clients achieve a truly personalised fit.

“If you’re buying a polo shirt, you can choose small, medium, or large – and that might suit most people,” he said.

“But if you want to get the best fitting shirt, you might need to go to a … tailor, or tailored advice when you're talking about financial situation, and this is where advisers can offer the additional services.”

This tailored approach, he added, is particularly valuable in retirement, where client circumstances, income needs, and risk tolerances vary widely.

“What the advisers can do is they can understand what's sitting on the rack, and they know they can do a better job. It's just about how do you actually tailor that to a client?” Minney said.

He noted that many super funds are now working toward more blended retirement income strategies, combining the age pension, account-based pensions, and lifetime income streams into cohesive plans.

“What they really trying to give them is something that's flexible and then something that's going to be there for life,” Minney said.

“What we're seeing is, when you package that together, you get a really good response, a really good outcome for super fund members. Advisers that can do that together as well can get a really good outcome for their clients.

“If they know enough about the super fund they're working with, or the client’s coming from, it's easier to show why your outcome is better.”