The Future of Financial Advice

Transcription

1 The Future of Financial Advice Robert DeChellis President & Chief Strategist Allianz Exchange

2 Polling Question On a scale from 0-10, what is the likelihood that you d recommend a career as a financial adviser to a family member or trusted friend?

3 Current impact of transformative forces Regulation and compliance Investment trends Digital advancements including AI Consider how these forces impact consumer wants and needs. 3

4 Disruptive Innovation: Everlane Top World s Most Innovative Companies 1 What does Everlane offer? Disruption on Purpose Online direct-to-consumer clothing Transparency of cost and margin Visibility to supply chain Ethical and committed to sustainability 4 1)

5 Vanguard Advisors Alpha 7 criteria for adding value Suitable asset allocation Cost-effective implementation Rebalancing Asset location Spending strategy Total return versus income spending Behavioural coaching The combination of these 7 items could create about an additional 3% in net returns Source Putting a value on your value: Quantifying Vanguard Advisor s Alpha, September We believe implementing the Vanguard Advisor s Alpha framework can add about 3% in net returns for your clients and also allow you to differentiate your skills and practice. The actual amount of value added may vary significantly, depending on clients circumstances. 5

6 What do consumers value? 6

7 What is Gamma? Designed to quantify the additional value that can be achieved by an individual investor from making more intelligent financial planning decisions 1 Asset Location and Withdrawal Sourcing 3.2% Total Wealth Asset Allocation Annuity Allocation Dynamic Withdrawal Strategy 6.4% 1.4% 9.9% Potential additional income of 22.6% 1 5 Liability-Relative Optimization 1.7% 1) The additional income that Morningstar estimates a retiree can expect to generate in certainty-equivalent income using their five Gammaefficient retirement income strategies. 7

8 Lines of defense RETIREMENT Annuities Model delivery accumulation Transition risk Model delivery decumulation Annuities VISION: Financial guidance is an indispensable component of helping consumers achieve their goals. Multi asset model portfolio Glide path construction 8

9 1 million seconds = 11 ½ days 1 trillion seconds = 32,000 years Baby boomers will have over $70 trillion in the US 1 and $1.8 trillion in Australia 2 by Accumulation = PV(1+r) N Decumulation = 1) The future of wealth in the United States, Deloitte University Press, 2015 (in AUD) 2) Rice Warner Super Market Projections Report,

10 Thank you. Questions?

11 Disclosures Allianz Exchange, a division of Allianz Life Insurance Company of North America. Allianz Life Insurance Company of North America, Allianz Life Insurance Company of New York, and Allianz Life Financial Services, LLC are affiliated companies. All are part of Allianz SE. Variable annuities are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis, MN In New York, variable annuities are issued by Allianz Life Insurance Company of New York, 28 Liberty Street, 38th Floor, New York, NY Variable annuities are distributed by their affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN Only Allianz Life Insurance Company of New York is authorized to offer annuities and life insurance in the state of New York. Not FDIC insured May lose value No bank or credit union guarantee Not a deposit Not insured by any federal government agency or NCUA/NCUSIF. Product and feature availability may vary by state and broker/dealer. Views and opinions expressed in this presentation are those of the speaker. 11

12 Disclosures The information contained in this publication is current as at October 2018 unless otherwise specified. It is provided by Allianz Australia Life Insurance Limited ABN , AFSL , the issuer of the applicable financial products in Australia. The information in this publication has been prepared specifically for authorised financial planners in Australia, and is not intended for retail investors. It does not take account of any person s objectives, financial situation or needs. The information contained herein is for illustrative purposes only, does not constitute financial advice, and is not a guarantee of future performance. The returns on the Future Safe product are subject to a number of variables including investor elections, market performance and other external factors, and may differ from the information contained herein. Please refer to the relevant product disclosure statement (PDS) for more detail. Neither Allianz Australia Life Insurance Limited nor any of its related entities, agents or employees accept any liability for any loss or damage arising, directly or indirectly from reliance on the information contained herein. PIMCO Australia Pty Ltd ABN AFS Licence No (PIMCO Australia) is not the issuer or promoter of the products and does not provide any general or personal financial product advice in relation to the products. PIMCO Australia provides investment management services to Allianz Australia Life Insurance Limited in relation to the products. It does not guarantee any return from, or the investment performance of, the products. 12

13 A clients view / the advice process Review Frame of reference Scope Revisit How? Money values / life themes Projections Strategy Track Document SoA

14 1 Milliman FinTech Products GBA Platform A cloud-based, high performance computing platform to provide real-time analysis of uncertain future outcomes for an individual s financial position Retirement ESP Big Data insights into the actual spending behaviour of 100s of 1000s of individual retirees

15 Creation of a measurement system for future outcomes A measure of how well positioned people are to achieve their future (retirement) goals i.e. can we provide confidence about their ability to retire? A measure of how much confidence they can have in this measure how tailored is their measure to them, how much information have they provided to enable full customisation to their life and goals? 2

16 Complexity Simplified Objectives matter, likewise a simple scoring system (red, orange, green) This illustrates retirement readiness for a real world fund with 1800 members targeting 70% through retirement. A more realistic spending goal for this particular fund suggests a greater proportion of their members can expect a relatively affluent retirement. 3

17 Case Study: Using The Milliman Platform In absence of customisation, low funding and presence of Age Pension imply strong benefit in taking more risk. Customised goals changes the success/risk dynamic. Relative importance of taking risk to meet goal reduces due to higher goal funding. Overlaying customer preferences radically changes optimal portfolio. Here, customer risk tolerance is much larger, making optimal portfolio less risky 4

18 Goals based Advice Link: