A structured approach to meeting client needs
By partnering with Brooks Macdonald, you’ ll have access to our wide range of solutions that offer retirement income for different segments of your client base. This way, we can help you decide which solution is right for which segment of your client book based on the degree of personalisation that your client needs.
There are three main pathways, and each serves a different and nuanced purpose. First, our Bespoke Strategy, which has been designed for clients who require a more complex portfolio construction. This could include the need for varying income levels over different years, managing a portfolio across several different account types and allowing specific changes to the longer-term component of their investment.
Our second option is our Tailored Strategy, which is aimed at clients who want to set an income level aligned to their individual requirements.
Finally, our Modelled Strategy, allows you to maintain the operational efficiency and consistency of reporting across your client bank by using your platform of choice. This solution is well-suited for clients with singular accounts who have income needs and a risk profile that is covered by one of our withdrawal capacities and risk levels.
While much of the focus in retirement planning rightly focuses on longevity and inflation risk, one of the most underappreciated and often the most pressing is sequencing risk. This refers to the impact of making withdrawals during market downturns, which can negatively impact the value of your clients’ retirement savings. Poor returns early in retirement can significantly reduce the portfolio’ s value over time.
Sequencing risk is an area that we know very well. Brooks Macdonald was one of the first to launch a dedicated and defined approach to managing client assets in retirement, because we know that a drawdown early in a client’ s retirement journey can have a significant impact on the destination.
We address sequencing risk through a time-segmented approach built on two distinct components. The first is a short-term component with duration-matched assets to satisfy income needs in the early years, over the first seven years, while the second is a long-term component designed to generate capital growth that can be used for income in later years, beyond the seven-year stage.
Supporting your retirement proposition
The UK population is getting older, so the need for tailored and well-calibrated retirement planning advice will only grow. The market is already evolving quickly. For the past 30 years, we’ ve seen the pension sector transform and adapt to changing market conditions. But one thing has remained the same, and that’ s the value of a personalised recommendation, delivered by someone who knows the market and knows their network.
Addressing sequencing risk in retirement
All clients deserve tailored recommendations that result in a positive outcome. However, every financial decision carries a risk and the choices made in retirement can often be the most consequential. To ensure your clients’ financial stability and wellbeing later in life, there are several risks that you need to be aware of and seek to manage.
First, there is longevity risk, which is the risk of clients outliving their savings. If retirees live longer than expected, they may exhaust their retirement funds, which could lead to financial difficulty in later years. Second, there is the inflation risk. The purchasing power of your clients’ savings may diminish over time. For retirees on a fixed income, this can make it trickier to maintain a good standard of living.
Staying ahead of regulatory changes is crucial for you. By understanding the FCA’ s 2024 review and leveraging Brooks Macdonald’ s expertise, you can provide the best possible advice to your clients. More than just meeting regulations, it’ s about showing your clients that you care about their future. For more information, visit Brooks Macdonald’ s website.
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