Graham Hand: I'm with Jody Fitzgerald from Morningstar Investment Management. Jody, you were saying in that session that you think retirees should focus more on cash flow and not just the income from the assets. Can you elaborate on that?

Jody Fitzgerald: Yeah, I think, that there's a mindset in retirement to invest in assets that have a yield, so bank stocks that pay a dividend, et cetera. What that actually does though is because you're thinking of income, it really detracts from the concept that in retirement, you've actually – you've spent your entire working life building up a volume of assets that you can then use to retire on. So, why wouldn't you draw down on some of that capital? Why are you only living off the money that your money makes, okay? So, it's sort of counterintuitive. And the main reason why I think it's important to think about how do I fund my cash flows with the assets I have rather than how can I earn income with my assets, is that by only focusing on the dividend or the income that you can receive, you may actually underestimate the risk of the asset that you've just purchased. And a really great example – during COVID – people obviously like bank stocks because of the dividends that they pay – during COVID, a lot of those stocks actually had to pull back the dividends. And in the U.K., the regulator actually stepped in and prevented the payment of dividends. So, dividends aren't guaranteed. So, to only focus on that element when making an investment decision I think is a very risky proposition. So, shift that mindset to how do I fund my cash flows from the assets that I have and investing those assets in a sensible way that won't expose me to too much risk but will meet the return requirements that I have.

Hand: And one of the problems we have in our industry is that we create these funds that we actually put a lot of people with different characteristics in, but goals and objectives are very personal, aren't they?

Fitzgerald: Yeah, and I think this is the real challenge the industry is facing that for quite a long time the industry has been focused on the accumulation phase and rightly so, because that's the phase that most people have been in. But in accumulation, we kind of all have the same goal, which is, accumulate as much wealth as possible, full of risk level that I can cope with. In deaccumulation or in retirement, we all become individuals. So, we all have different lifestyle aspirations. How much do I want to spend? Different bequest motives. Some people like the kids, some people don't. And we also have different life expectancies, different timings of cash flows. You don't know when you're going to need cash flows for major events like healthcare related events or age care related events. So, I think, it is really hard to have a single product, which is focused on meeting the needs of the masses because we become individuals. And I would say that that's where the advice part of the market is really important to assist in that and sort of understanding that there is not going to be a solution that meets 100% of your needs, but you need to think of how can that solution or that product assist in all of the other elements I need to think about in this space.

Hand: So, you're really saying every retiree has to consider themselves unique and their individual circumstances?

Fitzgerald: Absolutely. So, just because you're a certain age doesn't mean you should take a certain level of risk. So, somebody, for example, who is 60 with 30 years left to live versus 70 with 20 years left to live, intuitively, you might say, well, the 60-year-old can take more risk because they've got longer to go. But that 60-year-old could be fully funded. So, they might need $1 million today, in today's dollars terms, to meet their retirement needs. They might have $2 million. Why take risk if you don't have to? Versus the 70-year-old who might actually need $1 million, but they only have $500,000. They're going to have to take risks or compromise their lifestyle requirements. So, there isn't a one size fits all solution. It is – you need to take the amount of risk that's appropriate for you to meet your goals and your aspirations in retirement.

Hand: Thanks very much for your time today.

Fitzgerald: Thank you.