DFM looking for adviser ‘decumulation project’ partners
Discretionary fund manager Waverton Investment Management is looking to partner with both independent financial advisers and platforms on a ‘decumulation’ project, as it prepares to launch a ‘sophisticated’ solution for income-seeking investors.
Speaking to FTAdviser, John Bellamy, portfolio manager at the DFM, said that the firm, as a result of its current offering, has the ‘tools’ to address decumulation issues and is hoping to find a solution and a partner to bring them to market.
Mark Barrington, marketing director at Waverton, explained that the firm had already launched a single unitised fund, the Waverton Cautious Income fund, but he said client retirement requirements are “more sophisticated” and will need a more comprehensive solution.
Mr Bellamy added: “The cautious income fund we launched is all well and good if you can afford to live off the income and you are not drawing down on the capital, but unfortunately there’s not too many people that have that luxury.”
He referenced Standard Life’s work in the space on decumulation, adding that if a client goes straight into a portfolio with 50 per cent equities, clients may be taking money out whilst their portfolio is also falling in value.
“The pound cost averaging which you use in the savings phase is actually working against you, so what you actually need to do is start with a much more defensive portfolio and build the volatility over time.
“There’s a number of ways you can do that. You can structure bespoke portfolios or you can ensure income is only taken from the lower risk part of the portfolio so you allow the higher risk to be left alone and benefit from time.
“That’s something that will or should be focusing the attention of a lot of investors at the moment, because there certainly isn’t a ‘one size fits all’ strategy that you can buy into for post-retirement.”
Mr Barrington added that Waverton had been talking with Standard Life about their strategy, which the latter confirmed to FTAdviser. He said although Standard Life is a competitor, “when you look at the platform side they are interested in trying to structure solutions which meet the IFA needs”.
“They probably can’t do that just themselves so they are interested in talking to people like us as well. It is not just the pension pot anymore, it’s where do you draw the money from? And how do you draw it? And what pot do you want to grow?
“There’s quite a few moving parts and I think that’s why it’s a bit more sophisticated than saying heres an income solution - it needs a bit more finesse.”
Last year, there were several calls for the regulator to issue guidance on decumulation to give advisers a steer on suitability and risk in this market.
ruth.gillbe@ft.com
