Platforms that have well-developed drawdown solutions will be best placed to help advisers navigate clients through retirement, says Seven Investment Management.
7IM head of intermediary Verona Kenny says platforms with strong offerings in the drawdown space are vital for proper client management.
Speaking to Money Marketing, Kenny says: “Challenges for advisers to navigate include ensuring that clients don’t run out of their hard-earned money during retirement by drawing down too much, too quickly or by de-risking their portfolio too early and being recklessly cautious.
“Platforms that benefit from in-house investment expertise that have been the quickest out of the block to develop a sustainable drawdown solution are likely to be the winners in this space.
“Indeed, we have already started to see those advising on drawdown through centralised retirement propositions outsourcing to dedicated retirement income services which are run by investment experts and facilitated on platforms and this trend is only going to gather momentum.”
Risks in planning clients’ income in retirement, including sequential risk, portfolio valuation and inflation, are much discussed but have changed over the past few years.
The 2015 introduction of the pension freedoms has also given advisers more opportunity to advise clients in the decumulation phase, Kenny adds.
“This is where platforms have a vital role to play. How they tackle this challenge of aiding advisers with the retirement opportunities will be a key trend in the next few years and may well divide the market.
“This is because the platforms with in-house investment expertise that offer these dedicated drawdown services can help advisers with the delivery of a sustainable steady stream of income for clients while at the same time managing sequence risk and risk of ruin.
“They also have a clear role in helping advisers build a service that is scalable and repeatable but in a cost-effective way.”