Retirement income is changing as market movements force a more bespoke service for many clients.
But when it comes to innovating to help advisers streamline their retirement planning, providers are not doing enough, says Tim Morris, an independent financial adviser at Russell & Co Financial Advisers.
He says most platforms are too slow when it comes to adopting technology and ensuring functionality, which in turn hampers advisers' productivity.
In a Q&A with FTAdviser In Focus, Morris explains how he goes about retirement planning, why providers need to do more, and what the chancellor's pension tax measures will mean for pensions and other tax-efficient investments.
FTA: What are the main elements of your retirement income advice strategy?
TM: My at-retirement clients have higher portfolio values and I therefore run a more bespoke offering. This allows for drawing profits from funds that have performed better, or the least bad as the case has been recently.
Those with lower portfolio values are often invested in low volatility multi-asset funds. This tends to smooth out some of the market troughs.
FTA: Which products do you typically consider?
TM: I will consider any, yet have not used income-producing funds so much in recent years. This includes equity income and high-yield bonds. I tend to prefer strategic bond funds for fixed income exposure.
Fortunately, I had very little client exposure to government bonds, which capitulated due to the "mini-Budget" fiasco last September.
FTA: Do you have a centralised retirement proposition?
TM: We don’t, mainly because we are a relatively small firm and they take a lot of time and resource to run well.
You can easily use multi-asset funds or MPSs these days for a CIP and have plenty of choice. That’s not to say this won’t change.
At present our proposition serves retired clients well. The fund provider will vary depending on the clients’ particular needs and objectives. As well as their risk profile and capacity for loss.
FTA: How do you think retirement income advice might change after the FCA’s review and/or the consumer duty?
TM: There will very likely be further need to tailor and evidence the suitability of the investment approach.
I don’t see the need for major change, so let’s hope they don’t throw the baby out with the bath water – unless you count workplace pension default funds.
That is where I’ve had some potential clients approach me after losing more than a third of the value of their supposedly low risk portfolio, which was heavily invested in gilts.
FTA: Are providers doing enough when it comes to product innovation, especially since the pension freedoms?
