Most of the "retirement readiness" surveys that cross my desk these days suggest people are undersaving for their retirement.
I've been critical of the tactics used to drum up business by some in the financial services industry but that doesn't mean their numbers are wrong.
According to the latest data, in Canada, the average life expectancy for those who have already reached the age of 65 has increased 1.5 months each year over the past 40 years to just under 84 years for men and just over 86 years for women. The takeaway is you'll likely live longer and need more money to do it.
The financial services industry can be part of the solution here but they can also be part of the problem. The industry is a business in which high fees and conflicted advice can take a huge toll on their client's savings.
Canada has the highest mutual fund fees in the world and while advisers have a fiduciary standard to put their clients' best interests ahead of their own we still hear quips like, "Where are the customers' yachts?" and "Whenever I sit down with my adviser, I'm never sure whose retirement we are planning."
An aging population presents a new opportunity for members of the financial services industry to better serve their senior clients. Many seniors have amassed substantial financial assets over their working careers. Not all seniors are affluent of course, but as a group they control 55 per cent of the nation's discretionary spending power and have an income per capita that is 26 per cent higher than the national average. So as they move into retirement the challenge for many seniors isn't to accumulate more financial assets but to hang on to what they've got to fund their living expenses for as long as they live.
As a group they don't need more products, they need more advice. That advice needs to be individually tailored because each individual is facing specific issues with their health, finances, taxes, insurance needs, family and estate situation. It's a challenge but it's also an opportunity. And this is key - it requires a different mindset to go from helping the client accumulate financial assets for their retirement to helping the client manage those assets in their retirement.
Does the industry have a group within their ranks with proficiency and expertise in retirement income planning solutions?
I did a little digging into adviser designations targeting seniors in this country. They are not all equal. There are several financial designations and certificates that advisers can list as credentials that are targeted to retirement and eldercare planning. But there is no official senior designation in Canada's financial services industry.
Given that there are more than five million Canadians who are over the age of 65 and that number will double in the next 25 years the obvious question is why not?
Tom Carney is the former executive director of the Lionsview Seniors' Planning Society. Ideas for future columns are welcome. [email protected]
