JPMorgan Asset Management is looking to build support among UK financial advisers for its multi-asset income funds, ahead of the predicted increase in demand for different drawdown investment options from next April.
The firm believes that there will be increased need for portfolios combining income and capital preservation, following the Budget reforms.
Speaking to FTAdviser, Jasper Berens, head of UK funds, said: “The investors who used to have to buy annuities may instead be well served by multi-asset income funds that are easy to understand, accessible and lack complex and expensive guarantees.
“Advisers will need to be poised to help clients navigate their options in the new investment landscape.”
Simon Chinnery, head of UK defined contribution, added that the UK ‘smart retirement’ business has used experience from its US base, where less than 10 per cent of the market buys an annuity.
He said: “Advisers have cornered the decumulation advice space in the US, using income products provided by asset managers, and we think this will happen in the UK.
“As such we can build on our US knowledge about which investment products are most appealing for investors in post retirement and adapt for the UK.”
Mr Berens said that next year’s changes are seen as a significant opportunity for the firm and it will be adding to the investments and partnerships already established with the UK adviser community.
He said: “With the Budget changes, the bottom line is that advisers are going to have to step up to much more comprehensively advise clients on how they take their capital and income from maturing pension pots and furthermore how this works in the context of using their other accrued savings pots or their property to support their changing lifestyles, situations and requirements during retirement.
“To be equipped, financial advisers have to think about client needs at all stages of the retirement journey. It’s important that advisers have a well grounded framework for substantial, informational conversations in their toolkit.”
Following the Budget changes, Phil Mowbray, the head of retail services at Moody’s Analytics, said the FCA should issue guidelines to advisers to give them a steer on suitability and risk in the retirement ‘decumulation’ market in light of the radical changes announced in the Budget.
However, the regulator at the time that it will not be specifically looking at decumulation.
With DC savers no longer forced to purchase an annuity, many providers have been forced to re-think lifestyling default strategies that automatically de-risk in the years leading up to retirement, potentially losing out on the continued pension pot growth required for drawdown alternatives.
Last October the JPMorgan Asset Management launched its UK target-date fund range and Mr Chinnery believes that its active management and flexibility in the later years give them the edge over other providers.
