It is widely acknowledged that a solid understanding of a retiree's financial position is a necessary prerequisite to recommending an appropriate retirement solution, but one question I hear a lot from funds is "sure, but what about their preferences?" This is a valid question, since two retirees in the exact same financial position may have very different attitudes towards things like risk management and bequest motives. Hence we need to be very careful with the term "optimal retirement solution", if retiree preferences are not being adequately considered.
Again, to assist us, we can turn towards the Deloitte Retirement Trilemma (this time, looking at the Preference View, as seen in the video below). This provides a visual interpretation of the Retirement Income Covenant trade-offs and, importantly, links preferences for a given retiree directly to an available retirement solution on a provider's menu.
Of course, eliciting preferences is not necessarily a simple task, but we suspect funds will innovate in this area, using the data they have available about their members, in conjunction with meaningful AI-powered help, guidance and advice solutions.