A change in risk mindset can lead to better outcomes for those in or approaching retirement, says FE Investments.
During 2022, FE Investments launched its Decumulation Illustrator that encourages retirees to think about risk in a different manner to the way they view it in the accumulation phase. The tool frames risk as the probability of the investor running out of money.
According to an adviser survey by FE fundinfo, 70% of advisers now have a Centralised Retirement Proposition, an increase from just under half of all advisers surveyed a year ago. A further 20% plan to develop one.
Toyosi Lewis, retirement investment specialist at FE Investments, said: “The primary objective of retirement planning is to replace the income from work with a retirement income that provides savers with an income that they are comfortable with and not just one that they can survive on. As savers approach retirement, many rely heavily on the advice provided by experts as they look to navigate the plethora of options available to them.
“A well thought-out plan, therefore, is imperative as it can reduce the probability of them running out of money and gives them peace of mind. However, with so much turbulence within the investment chain – both regulatory and other pressing financial matters – the challenges facing advisers are now more complex than ever before.”
Lewis said it had led to an increase in demand for innovative decumulation solutions for advisers to use.
FE Investments has launched two model portfolio solutions that are specifically made for distinct retirement risks. The Initial Income Portfolio’s defensive positioning insulates against a large market fall, meaning investors can withdraw money from it on a regular basis, while the Long Term Retirement Portfolio is diversified across multiple asset classes.
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