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Complexity holds back advice on hybrid decumulation products

Nearly three quarters of financial advisers believe more product innovation is needed in decumulation, according to an exclusive survey by Bankhall with Money Marketing, but complexity continues to be a barrier to advice on hybrid products.

In the survey of 252 IFAs for Money Marketing, Bankhall asked advisers what the main barrier to recommending more hybrid products in decumulation is.

Thirty four per cent said that it was complexity, 20 per cent said there are better ways to meet the same client needs, 18 per cent cited a lack of products, and 13 per cent said there was a lack of client demand.

When asked if they expect more providers to launch hybrid products in the next 12 months, 47 per cent said yes, 39 per cent were unsure and 14 per cent said no.

Bankhall managing director Julie Sadler says trying to manage a portfolio to produce an income while maintaining value is complex and advisers need better products to assist them.

She adds: “Advisers want a solution that enables them to service their clients year-in and year-out, without the worry of clients running out of funds.

Does guaranteed drawdown have a future?

“Part of that is around portfolio design and fund innovation, particularly in the wake of the decline of traditional with profits funds

“Yet, despite this, what we have seen in recent years is providers offering hybrid retirement products dropping out of the market, with one of the latest being Aegon in March.”


Understanding bucket-based investing for decumulation

Bucket-based investing is an approach to reducing risk during decumulation advocated by many advisers. It involves dividing the client’s portfolio into, say, three sub-portfolios with different timeframes. Investors in decumlation cannot afford to take as much risk as they do during the accumulation phase of their lives, so they need to change their investment strategies. […]

Justin Cash, Editor of Money Marketing

Editor’s note: Decumulation charging needn’t be a danger

Should clients be charged the same way in accumulation as they are in decumulation? The majority of advisers still use percentage charges in the run-up to retirement, and a new study – the subject of our cover story this week – suggests that the market plans to keep them in place for decumulation for some […]


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  1. New solvency rules for insurers have contributed to the reduction of product offers (they have to hold more capital against “guarantees” now, rather than just rely on historic asset performance assumptions). Ultimately though, the very low interest rate environment precludes satisfactory returns being delivered in addition to sensible levels of protection. You can’t get a quart from a pint pot/there’s nowt for nowt etc. Clients and advisers either have to settle for returns on traditional annuities or accept an appropriate level of risk to capital and/or income if they are seeking higher returns. The role of the adviser in delivering appropriate solutions for individual clients (with individual needs) has never been more important than now – no amount of “fintech” or “blockchain technology” can replace the ongoing, highly-personalised service of a decent adviser.

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