Dealing with complexity: simple outcomes

He says: “From an adviser’s perspective, their job is becoming increasingly complex. Firstly, they have to understand their client’s needs and desires and then, often, will be tasked with bridging the gap between what that person would like to achieve and what the outcome is likely to be. Secondly, the adviser has to manage t the portfolio itself. Finally, there is the onslaught of regulation, which makes it very hard for most advisers to do the first and second points unless they have significant resources behind them.

“From a client’s point of view, we are in the midst of a big structural change in terms of saving for retirement. In the past, people were likely to join a company, work a certain number of years, retire and get paid a pension that they knew they would be able to live off. The defined benefit world has quite quickly come to an end and because of that we have greater controll over our savings. Auto-enrolment is making up one part of the solution to empower people to take control of their retirement savings and we hope this range also offers a way to cut through the complexity that arises when faced with an ever-wider range of options.”

Mr Fitzgerald is confident that Aviva Investors as a whole and the multi-asset team in particular is well-placed to deliver a stellar investment proposition to appeal to a wide range of advisers, from those who remain keen to carry on with portfolio construction, through to those would prefer to outsource that process.

“We now have three options for advisers, including market-leading single strategy funds in areas where we have real depth of knowledge for those who still want to build their own portfolios,” he confirms. “In addition, we have a range of risk-targeted funds, which advisers match their clients to through profiling their investment needs and appetite for risk. Finally, with the new outcomes-based solutions we are able to say to advisers, divert your resources into understanding your clients, decide whether their aim is to save for retirement, draw an income or deal with inflation and then put them into one of the funds. We then deal with achieving that outcome, irrespective of market conditions, while cutting through the complexity.”

The proposition has been built from the ground up to be a one-stop solution that allows advisers to outsource the complicated issues that dominate the investment process. Over any three year period, the proposition aims to deliver average annual returns of 5 per cent above the Bank of England base rate before charges. To achieve this we begin by formulating a view on markets, working out a multi-strategy approach to ensure the portfolio can make money in a range of different scenarios and balancing each component to maximise return and minimise risk. In essence, investors benefit from the entire investment team looking after their money, using its considerable resources and expertise to create a single solution.

While the Multi-Strategy Target Return fund has already been launched and has been well-received by the adviser community, Mr Fitzgerald is also anticipating a positive response to a further fund focused on income which is due to be launched later this year.

He says: “Income has become a hot topic, particularly as there has been a raft of changes in policy. It used to be the case that when you hit retirement, you had to buy an annuity. In many ways there was no complexity as there was no choice. Now, the Chancellor has said you do not need to go into an annuity at retirement, which is leading to a range of products being launched to replace annuities in the retirement income space. In many ways that is a positive thing as choice is always good. However, the challenge comes as choice also brings complexity. We are coming to market with a solution that aims to make sure a certain amount of money goes in the client’s bank account each month, regardless of what is going on in the market. We believe this will be very appealing.

Mr Fitzgerald is keen to stress the efficiency and accountability that is built into the funds, particularly in terms of cost and risk management. For the former, he states that being part of a collective, in-house solution has clear benefits to the end investor.

He also believes there is a greater level of accountability with these funds than with a multi-layer approach as it is clear to see whether they have met their targets or not. With a cascade chain of responsibility it is possible for an underlying manager in a fund of funds to beat his or her benchmark but still deliver a negative return. While the manager will see that they have delivered on their goal and will probably be rewarded by their company, the end client has still lost some of their pension pot.

“By moving to a single solution, it is very easy to see whether it has delivered or not and you get away from having different levels of people saying, “well, I have delivered my part”. Ultimately, we believe it is our responsibility to help take complexity out of investors’ lives and help them grow their money. We make sure that every penny we invest is working towards that goal. Everything is tied up within one simple and cohesive process.”

To find out more go to avivainvestors.co.uk/AIMS/adviser, call 0800 015 4773 † or email fundandsalessupport@avivainvestors.com †Calls to this number may be recorded for training and monitoring purposes. Calls are free from a BT landline. Call charges may vary from mobiles and other networks.

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The value of an investment can go down as well as up. Investors may not get back the original amount invested. The return and volatility objectives are targets only and there is no guarantee that they will be achieved. In order to fulfil the fund’s objectives the manager invests principally in derivatives contracts. Please refer to the fund objectives and investment policy contained in the Key Investor Information Document and the Prospectus.

Issued by Aviva Investors UK Fund Services Limited, the Authorised Fund Manager. Registered in England No. 1973412. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119310. Registered address: No. 1 Poultry, London EC2R 8EJ. An Aviva company. www.avivainvestors.co.uk CI063110 09/2014