Why our collective mindset matters in a world of uncertainty
Can our collective mindset make a difference in the lives of Australian retirees? Is it possible to harness the power of fresh thinking about a big challenge - derived from a growth mindset, not a fixed position - to help see the traditions, value judgements and accepted wisdom about retirement in a whole new light?
Might our traditional, fixed thinking about solving problems and being closed to new opportunities be a material factor that is holding us back?
There is certainly abundant opportunity in these post-Hayne Royal Commission days to take a step back, re-set our thinking and focus on core priorities and purpose. Rather than be stifled by the environmental factors of the day, a simple act of thinking a problem through with a different mindset can allow new possibilities to emerge. So what does this mean for retirement?
The adherence to conventions and traditional thinking applied in the past have got us a long way. For example, Australia's $2.9 trillion1 national savings pool got there by some initial brave policy thinking but has relied on consistent decades of established thinking based on conventional 'accumulation' investment wisdom.
Now at the start of a demographic crossroad, those leaving the accumulation (or lump sum) phase and entering retirement are virtually alone when now seeking to make informed decisions about what path to take with their superannuation lump sum.
Of course, the role of quality financial advice has a huge role to play here. So too do product manufacturers. So too, does the role of being brave, thinking outside conventions and applying rigour to test your hypotheses.
When our 'start-up' team sat down to clearly pinpoint, and then re-think, exactly what retirement means and more importantly, feels like in Australia, we also took on a personal psychological challenge - let's overcome our own blinkered acceptance of conventions and traditional solutions.
We homed in on a simple discovery: Perhaps conventional wisdom about retirement and investment solutions is the thing we need to most confront?
Well, our deep-dive research was clear: things were not all great. It told us that retirees, and their hardworking advisers, simply wanted better than what was on offer. They told us that uncertainty in retirement was a huge issue. This uncertainty was resulting in retirees making poor choices - living too frugally, or taking more investment risk than they would like...
Pre-retirees said they had worked hard through their working lives and wanted to know they could reach the goals they deserved in retirement - unburdened by the worries about where their finances might end up or even outliving their money. They wanted more confidence in the outcomes of their investment choices in retirement....
We 'growth mind-setters' saw the opportunity to make a genuine difference in a system where the focus has long been on the accepted 'accumulation, lump-sum, drawdown' paradigm...and challenge that with a new approach.
The critical role of advice and guidance
We also found that the professional financial advisers guiding Australian retirees, their families and futures, are very important in helping them live happier, more confident lives. Our engagement in the advice community in creating a new product design, built from the ground up on fresh thinking and a 'what's possible here?' mindset was absolute.
Fear is a powerful emotion. The human brain is hard-wired to respond to a looming threat or challenge with a 'fight or flight' response. We seek to work with advisers to help overcome client fears about retirement, and to help see that a 'fight' mode is possible in overcoming the uncertainties felt by clients when setting their retirement goals. Choice, flexibility and certainty are some of the attributes we seek to offer and promote - and these all came out of our collective understanding and combined efforts to meet various challenges.
Currently, the Australian financial advice sector is feeling its own level of uncertainty and perhaps some fear about its future. We are here to say that, amidst the uncertainty, one clear thing is certain: the need for quality, professional financial advice is only going to grow.
It is evident that ever-larger numbers of Australians will benefit from goal setting, planning, monitoring, management, and reassurance that they're staying on track.
We, as product providers in the wealth industry ecosystem, recognise and respect the efforts that financial advisers are engaged with to continue to learn and become even more highly qualified. That the industry is driving hard towards being recognised as a true profession.
For our part, during these days of challenge and uncertainty, we strongly encourage financial advisers to look deeper to think about the immediate challenges with a new perspective.
Our experience in adopting new thinking was a revelation and helped spawn a new pathway, building enormous energy, hitting a new set of targets and driving each day a huge resolve to succeed. Growth thinking could just work for you!
Matthew Rady is CEO of Allianz Retire+