Brooks Macdonald has launched a decumulation service for clients in drawdown.
The wealth manager said this aims to tackle challenges of drawdown – such as sequencing risk, the risk of low market returns at the time of withdrawing, with a “two-pot portfolio structure”.
The service is for clients with a minimum of £500,000 to invest, who are either withdrawing their pot or are looking to do so within the next seven years. It targets investors with medium to high profile risk and the service is only available through financial advisers.
The short-term portfolio, which provides income for 0-7 years, consists of cash and structured products issued by banks such as HSBC and UBS. These mature every six months, catering for the subsequent 5 years’ income.
The other part of the portfolio is multi-asset with between 40 per cent and 95 per cent invested in equities. According to the wealth manager, this part of portfolio will have a higher risk profile and a high degree of equity exposure in order to generate the required returns.
Brooks Macdonald chief executive Caroline Connellan comments on the launch: “With the reality of pension freedoms, individuals are required to take responsibility for their income in retirement.
“However, with longevity and inflation risks, people are often uncertain how to manage their money and make it last through their retirement.”
“That is why we have launched the Brooks Macdonald decumulation service. This takes an innovative approach to retirement drawdown, aiming to mitigate these risks and to give a greater degree of certainty over income throughout retirement.”
Brooks Macdonald UK Investment Management co-head and managing director and John Wallace says: “Many pension savers who go into drawdown can be knocked out by a market downturn in the early years of retirement and never recoup their losses. Our unique dual strand portfolio is designed to control untimely sequencing risks.