Advisers will need to be prepared to service clients on very different retirement journeys to their current client base, with the landscape set to change significantly over the next 15 years, according to Canada Life.
By 2035, there is forecast to be 20.9 million people over the age of 60, but their retirement experiences are “fragmenting” as a result of changes to the way people spend their time, accumulate and spend wealth, as well as “the rise in individualism and the declining relevance of social norms.”
According to Canada Life, there will be two major retirement journeys; those identified as ‘Complex Families, Complex Finances’ and ‘Late Financial Bloomers’
The former are identified as those clients whose family situation complicates their financial needs and planning, such as taking care of both their children and their parents’ financial needs. This group currently accounts for 32% of the over-60s market but is expected to be the largest group by 2035.
Meanwhile late financial bloomers are characterised by achieving financial stability later in life. They make up 6% of the market but are expected to grow significantly over the next 15 years.
At present, the majority of advisers’ business models cater to clients with strong financial foundations, often due to good fortune in their family and working lives. However, Canada Life warned that this group would decrease as a total proportion of the retirement market going forward.
Sean Christian, managing director, wealth management division of Canada Life, said: “These new retirement journeys show us that the opportunity is fragmenting and focused in new areas. Societal changes have, and will continue to have an impact on the way we live in retirement, changing both the lifestyles and advice needs of clients.
“Unless the industry shifts its focus to support the clients that need them, we will collectively miss out on the opportunity to enable these people to have better financial futures.”