Your IndustryAug 13 2015

Sanlam launches retirement income service

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Sanlam launches retirement income service

Sanlam Private Wealth has launched a retirement income service, allowing investors to unbundle between as many tax wrappers as needed, so Isas, bonds, pensions and investments can be combined under one strategy.

The approach is to blend the best aspects of specific products with a tailored strategy that reflects each client’s requirement for income and personal tax situation.

Craig Massey, chief executive of Sanlam Private Wealth, said that the service follows a “huge amount” of research focusing on optimum investment strategies for the accumulation stage, but very little on the topic of decumulation.

“One of the biggest challenges for our industry is how to manage drawdown money safely and sensibly for clients, particularly with the large number of retirees now opting for drawdown rather than taking annuities.”

Portfolio structure will generally comprise three elements: a liquidity fund for the first two years to meet immediate cash flow needs, an asset matching fund for years three to five to produce cashflows that meet anticipated expenditure, and a growth and income fund from year five onwards to maximise the longevity of investments and regular income streams to top up the first two.

Mr Massey stated that one of their key beliefs is that the best retirement outcomes rise from taking a holistic view of a client’s invested capital, noting that most clients use Isas, investment property and other types of capital in unison.

Charles Brand, the firm’s head of discretionary portfolio management, added that having things unbundled between as many tax wrappers as needed allows them to choose and allocate assets suited to both the pattern of income a client intends to draw as well as the tax treatment that each wrapper confers on them personally.

“This does not affect the cohesion of the portfolio, it simply reduces tax leakage with the intention of improving net-of-tax returns to clients.

“We are used to working with advisers to dovetail a bespoke retirement investment programme for clients’ financial strategies and particularly those who utilise cash flow planning as part of their advice to clients,” said Mr Brand.

He added that the output of systems used by such advisers can give cues on how to match strategy to their client’s income plans.

peter.walker@ft.com