Ludovic Theau from Australian Ethical speaks to Laurence Parker-Brown from The Inside Network on what has changed across this investment theme in the last few years. The Inside Adviser
The average financial adviser is older and brings in more revenue than they did a year ago, but that hasn’t translated into a fatter salary according to data from Adviser Ratings.
Orford achieves another milestone with lifetime annuity
After a lifetime in super administration, David Orford has realised another long-held ambition. This week he announced the final piece in what he believes is the best retirement solution in Australia, which will be manufactured in conjunction with Generation Life.
Optimum Pensions, controlled by the Orford Foundation, which is the beneficiary of most of Orford’s share in the $100 million that IRESS paid in 2016 for his passion of 40 years – Financial Synergy. He started the super admin system business, which became the engine for many big funds, in 1976 and it continues to this day as IRESS Superannution.
The latest deal, with Generation Life, an investment manager and writer of investment bonds, will enable the launch this year of an investment-linked lifetime annuity, with Generation Life providing the investment pools for the investment options plus the administration of the product and Optimum Pensions providing the intellectual property and actuarial calculations and support.
Orford said this week that he started the journey, in late 2017, “to develop better retirement income options for Australians,” something he had long been passionate about. He was joined by Peter Rowe, the general manager, who also had a long career in the operations of super funds, including 22 years at industry fund Vision Super, where he was COO until 2015.
Rowe said that while Optimum developed the intellectual property and systems behind the product, the company needed someone to actually manufacture it and take it to the market, which will be for both big super funds and individual retirees.
“Generation Life has now signed with us to do that,” Rowe said. “Generation Life will offer it to the general public and also can provide a white label version for super funds to offer to their members.”
Set to launch later this year, the annuity addresses the gap between account-based pensions and traditional lifetime annuities. It will provide income for life that moves in line with the retiree’s chosen investment options, a gap which has long held back the development of a more attractive retirement products market in Australia.
The beauty of investment bonds is that they are tax-effective. They have come back in vogue in recent years because of the caps on super contributions and limit on total assets held in an individual account. They represent the second-most attractive generally available investment structure after super.
Grant Hackett, the chief executive of Generation Life (and former champion swimmer), said the creation of the product followed the Government’s Retirement Income Review last year, which outlined the complexity of Australia’s retirement system and the need for guidance.
“There has been insufficient retirement product choice to help Australians optimise their savings and provide a lifetime of expenditure,’ he said. “The Retirement Income Review has made it clear there’s an urgent need for solutions that will deliver a steady income stream whilst providing protection against outliving savings.”
His company had set up a ‘retirement solutions’ team to build the investment-linked lifetime annuity, with Patrick Clarke appointed as general manager, retirement solutions. Clarke would work closely with Optimum Pensions to build the tools for advisers, he said.
Hackett entered the finance world at Westpac when he gave up the world of swimming in 2011. He then spent four years at the hedge fund firm Regal Funds Management before joining the Generation Development group in 2017, initially in charge of distribution.
