Schroders chief investment officer Alan Brown says the asset management industry needs to develop more products for the post-retirement sector.
Brown says Schroders has been looking at the asset decumulation phase of the market for the past couple of years, and has had some success with products such as the income maximiser but believes the industry has yet to scratch the surface.
He says: “Most of what the asset management industry focuses on is the asset accumulation phase but, as people live longer and things like the requirement for annuities once you reach 75 is possibly relaxed, post-retirement products will become more important.”
Brown says the likes of target retirement date products – which have been popular in the US – and hybrid products between DB and DC pension schemes are areas where asset managers need to look, as well as the introduction of modern-day tontines “without the arsenic”.
He says: “In five years time, I would expect asset managers to have produced a hundred or so products for retirement, with around 20 succeeding. It is a difficult space but it needs to be tackled.”
Brown is also calling for rating agencies to be directly regulated. He believes that an independent body needs to ensure that rating agencies deal appropriately with any conflict of interests.
He says: “They also need to go a step further by ensuring that the rating agencies be more transparent about the stress tests they have used when they are forming their ratings.
“For example, at one point, S&P and Moody’s were only assuming a 5 per cent fall in house prices, if we had known that, we would have interpreted their ratings somewhat differently.”