View more on these topics

NU chief warns of lifestyling ‘trap’

Norwich Union finance director Mike Urmston has given a stark warning that lifestyling on pensions is a flawed concept which will trap people in low-performing assets as they approach retirement.

He says the problem is compounded by the continued dominance of fixed annuities over unit-linked variants which means that many people are spending up to their last 30 years almost solely invested in fixed interest.

Urmston argues that no one providing an asset allocation model for a younger person would recommend a portfolio solely comprised of bonds and he questions why retirees and those approaching retirement should be shoehorned into an undiversified portfolio.

Hargreaves Lansdown inv-estment manager Ben Yearsley says that while, in theory, life-styling has its benefits, in practice, a one size fits all approach is too arbitrary. He says this does not factor in crucial details that would affect an individual’s optimum port- folio structure such as their retirement age and attitude to risk.

Urmston wants the industry to devise new products such as guaranteed income veh- icles that offer a form of longevity insurance.

He says people who are set to retire at 65, having had their portfolio lifestyled for the last five years, still have an average life expectancy of around 20 years and considers this makes little sense particularly with annuity rule changes coming in next year.

Urmston says: “Lifestyling does not seem to make a lot of sense and I cannot help thinking if the annuity rules are changing, then this policy should be reviewed.

“The majority do not buy unit-linked annuities and yet you would not advise this asset allocation to anyone younger investing for such a length of time.”

Yearsley says: “You will get no capital growth from bonds and no rising income. Equity income would be better for many but no one size fits all.”


A private matter of deposits

We are a private limited company and want to know if there are alternative options to holding our cash on deposit at the bank, where the interest is not particularly

Riddoch moves in shake-up

Clerical Medical financial services sales director Graeme Riddoch is moving within the HBOS group in a restructure of the intermediary division. The review was instigated by Clerical parent firm HBOS which has changed Riddoch’s former role. Clerical director of market development Keith Gilmour will take on Riddoch’s workload in the new role of director of […]

Right side of the law

The biggest surprise about Halifax launching a fixed-fee conveyancing service is – why hasn’t it done it before?

Ditch the Treasury

Standard Life with-profits policyholders have lost out on more than 1bn of investment profit since the insurer was forced last year by the FSA to sell billions of pounds worth of equities from its with-profits fund, according to research. Can the Government continue to accept that the Treasury is the right depart-ment to have responsibility […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm