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Defaqto publishes sustainable income drawdown guide

19 September 2020

Financial information and technology provider Defaqto has published a new CPD-accredited guide to help advisers with drawdown.

Using drawdown to provide a sustainable income, created in partnership with Royal London, will provide facts and tips to help advisers research the drawdown process and provide compliant recommendations.

The guide is split into two parts; the first half covers the advice process, while the second half focuses on the retirement support and solutions offered by Royal London.

Defaqto said the Covid-19 crisis had created the “perfect storm” of falling capital values combined with income drying up due to dividend suspensions and reductions, creating a need for advisers to “sharper their focus on risk and sustainability.”

David Cartwright, head of insight and consulting, Defaqto (pictured), said: “We may be living through unprecedented times but thoroughly explaining and assessing risk has always been key for an adviser to provide suitable advice.

“Many clients, currently in or approaching drawdown, will be feeling vulnerable and advisers should keep in mind that the attraction of a strategy more tailored to providing a sustainable income for life may become the overriding need.”

According to Defaqto, recent events had further highlighted the need for advisers to take a more tailored approach to clients’ investments, noting that it is not uncommon for advisers to recommend investment strategies designed for accumulation to clients in need of income.

Cartwright added:“Our latest CPD guide looks to arm advisers with an in-depth understanding of how to provide suitable advice that results in sustainable income. Not only by giving a detailed explanation of how to review risk but also how to tailor the approach to both accumulation and decumulation.”

Commenting on the publication of the guide Ryan Medlock, senior intermediary development and technical manager at Royal London, said: “Income drawdown has grown from being a niche solution to becoming part of mainstream retirement planning since the advent of Pension Freedom and Choice. However, there are many factors that need to be considered and this guide is a comprehensive source of information on the whole advice process from how to determine whether income drawdown is the right solution for your client right through to planning an income that will last your client throughout retirement.

“While such a guide is always useful we feel that it is particularly timely to revisit this information given the market volatility experienced as a result of COVID-19 and its impact on retirement portfolios.”

Further information and to download the report go to the Defaqto website.

Professional Paraplanner