Australia is entering a decisive phase in its retirement system. A perfect storm of demographic change, policy reform and rising cost pressures is forcing a fundamental rethink of financial advice. By 2034, almost a quarter of Australian adults will be entering the retirement phase, shifting the system’s centre of gravity from accumulation to decumulation. This marks a transition in what clients need and what advisers must deliver in the decades to come.
From balances to income: a structural reset
For decades, advice has focused on wealth accumulation - portfolio growth, contributions, and balances. Retirement reframes the question entirely, as clients are no longer asking “How much do I have?” but “Will my income last?” This shift introduces new complexities: longevity risk, sequencing risk, and a behavioural transition from saving to spending, which many retirees struggle with.
Rising inflation, increasing healthcare costs, and housing affordability challenges are eroding retirement confidence and increasing the need for stable, predictable income streams. The introduction of the Retirement Income Covenant in 2022 accelerated this shift, requiring superannuation funds to develop retirement income strategies that maximise expected retirement income, manage the risks to that income, and provide flexible access to savings.
This has driven a more segmented view of retirement. Rather than treating retirees as a single cohort, super funds are increasingly recognising distinct groups across the retirement journey, providing a more tailored approach to income design, product selection, and advice support.
Across Australia’s largest super funds, retirement income strategies consistently recognise the role of lifetime income solutions as part of the broader toolkit to manage longevity risk and improve income certainty. This represents a significant pivot, from a system designed primarily to build balances to one focused on delivering sustainable income. However, while the direction of travel is clear, implementation remains uneven. Many advice processes, tools, and business models are still rooted in accumulation.
A defining opportunity for advisers
While millions of Australians are approaching or entering retirement, access to advice remains constrained, creating a widening advice gap at the point where decisions are more complex and less forgiving. Missteps in drawdown strategies or risk mismanagement can materially affect a client’s long term quality of life.
This environment is further evolving the role of the adviser, building on capabilities many have already developed, including portfolio construction, designing sustainable income, managing market and longevity risks, and guiding clients through uncertainty. Technology can enable scale, but human advice delivers trust and context, both of which are essential in retirement decision-making.
Tackling a complex challenge head on
Retirement income planning is far more complex than building accumulation portfolios. Advisers must balance flexibility and certainty, growth and protection, liquidity and longevity - a level of complexity that only a skilled adviser can provide, with judgment, insight and personal guidance.
Despite their theoretical value, lifetime income products such as annuities have historically seen low adoption in Australia, due to structural and behavioural barriers: the complexity and limited understanding of longevity pooling and the associated trade-offs, and limited integration into advice processes, which makes them harder to compare and recommend.
As a result, many retirees remain overexposed to market risk or underspend due to fear of running out of money - both suboptimal outcomes. However this is beginning to change, with a broader industry shift toward embedding guaranteed income as a core component of retirement strategies, rather than a niche product. Now, the products themselves are also far more flexible and adaptive to an individual's circumstances.
Technology as the enabler
For too long, the industry has understood what good retirement advice should look like, but lacked the tools to deliver it consistently. The constraint has not been strategy, but execution: the ability to design, test and communicate retirement income strategies in a way clients can truly understand.
At Iress, we believe advisers should be properly equipped to have clearer, more confident conversations about trade-offs between certainty and flexibility, growth and protection - so clients can make informed decisions with confidence.
When income modelling, scenario analysis and client engagement are embedded into the advice process, advisers can move beyond static projections to dynamic strategies and deeper conversations that evolve over time.
Platforms like Xplan are enabling this shift, but the real transformation is broader. As these capabilities become standard, they raise expectations of what advice should deliver at scale.
Delivering retirement income advice at scale
I truly believe we have reached a defining moment for the advice industry. While the Retirement Income Covenant has set the direction, rising cost-of-living pressures have increased urgency, and product innovation, particularly in guaranteed income, is expanding the toolkit.
The question is, how can advisers be supported to deliver retirement advice effectively, at scale, and in a way that Australians understand and trust? We know the opportunity for retirement advice is urgent, and Iress’ retirement income solution within Xplan is designed to help advisers bring clarity and confidence to clients.
This next phase of advice is about redefining outcomes. The industry has the chance to build deeper trust, deliver more meaningful guidance, and ultimately reshape what good retirement advice looks like for the generations ahead.
Learn more about the retirement income solution on the Iress Community.
