Bringing you live news and features since 2006 

Brooks Macdonald launches Decumulation – a new approach to retirement planning

RELATED TOPICS​

Wealth manager Brooks Macdonald has launched a new Decumulation Service to meet the evolving needs of the ‘at retirement’ market and beyond.

Since pension freedoms began in 2015, over 1.8 million people have accessed their defined contribution pension pot and tens of thousands more have transferred out of their defined benefit pensions. Income drawdown often becomes their first choice of investment with nearly double the number of people who are taking out annuities. However, the development of new solutions for the opportunities and challenges posed by these new freedoms is in its infancy.

Brooks Macdonald, CEO, Caroline Connellan, says: “With the reality of pension freedoms, individuals are required to take responsibility for their income in retirement. However, with longevity and inflation risks, people are often uncertain how to manage their money and make it last through their retirement. That is why we have launched the Brooks Macdonald Decumulation Service. This takes an innovative approach to retirement drawdown, aiming to mitigate these risks and to give a greater degree of certainty over income throughout retirement.”

The Brooks Macdonald Decumulation Service, available exclusively through financial advisers, is for clients with a minimum of GBP500,000 to invest who are either withdrawing income from their portfolio or are set to do so within the next seven years. Designed for medium to high-risk investors, the service aims to reduce sequencing, longevity and inflation risks.

This bespoke service divides a client’s portfolio into two strands – a short-term portfolio and a long-term portfolio. The short-term portfolio provides 0-7 years’ income and aims to reduce sequencing risk. Uniquely for a service of this kind, the short-term pot is invested in a mixture of cash (typically providing income for the first two years) and structured return assets issued by major banks such as HSBC and UBS (maturing every six months, catering for the subsequent five years’ income). 

The other strand of the portfolio, the growth element, is designed to beat inflation risk over the longer term through investment in diversified assets at the client’s highest acceptable tolerance for risk. This will be through a multi-asset approach: with between 40 per cent and 95 per cent invested in equities.

Brooks Macdonald research (looking at more than a 100 years of data) and back testing has shown there is little benefit from maintaining a two-pot structure beyond seven years. Therefore, at the end of this period, once the seven-year pot has been exhausted, the long-term pot becomes the source of income. At this time and if required, a new short-term pot could be initiated dependent on the client’s needs.

John Wallace, Managing Director and Co-Head of UK Investment Management, says, “Many pension savers who go into drawdown can be knocked out by a market downturn in the early years of retirement and never recoup their losses. Our unique dual strand portfolio is designed to control untimely sequencing risks.

“We feel our service can benefit clients in or approaching drawdown who, in this changing pensions market, may put their retirement income at risk from products or solutions not wholly appropriate for their specific retirement journey.”

Latest News

Saving and investing app, Moneybox, has doubled the number of ETFs available on the platform, in the light of ‘growing..
Global X ETFs has announced the appointment of Ryan O'Connor as its Chief Executive Officer effective as of April 8, 2024. ..
Value-driven structured credit investing firm, Angel Oak Capital Advisors, LLC, has announced the completed conversions of two of its mutual..
Confidence in the continuing strength of bitcoin and Ethereum is driving wider interest in altcoins and other digital assets, according..

Related Articles

Jeremy Senderowicz, Vedder Price
Jeremy Senderowicz, a member of the Investment Services Group at law firm Vedder Price, has witnessed a steady upswing in...
Graham MacKenzie, Toronto Stock Exchange
The evolution of ETFs has been a multi-decade experience for Toronto Stock Exchange says Graham MacKenzie, managing director, Exchange Traded...
Frank Koudelka, State Street Global Services
ETF data provider and ETF Express data partner, Trackinsight, has published its Global ETF Survey 2024 Report: ‘50+ Charts on...
Cryptocurrencies
Matteo Greco, Research Analyst at Fineqia International writes that bitcoin (BTC) ended the week at approximately USD52,150, showing a notable...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by