Fewer advised clients use partial drawdown than self-directed clients, according to Barnett Waddingham.
Andy Leggett, head of self-invested personal pension (Sipp) business development at the provider, told Money Management that analysis of its drawdown book revealed an strange trend in how the product is used.
“Execution-only were more likely to use partial or phased drawdown, which is more sophisticated,” he said.
The ratio of those using full drawdown to partial for advised clients was two to one, he said, while the two approaches were matched evenly for self-directed clients. The analysis was carried out on Barnett Waddingham’s book of more than 1,000 drawdown plans.
Mr Leggett said the difference may be attributable to the FSA’s thematic reviews in 2011 and 2012 which included income drawdown and highlighted concerns over advice in this area.
“Correlation is not causation but it is tempting to look at that and say advisers have been rather put off by the drawdown thematic review from using partial and phased,” he said.
“In any event, you would expect that advised members would be more likely to use partial or phased and actually the opposite is happening.”
Mr Leggett highlighted that partial drawdown is not suitable for everyone but that it is counterintuitive that, as a ‘value added’ option, it occurs less frequently in advised cases than direct.
“Using partial or phased drawdown won’t be right for everyone, it will increase your costs. It depends on personal circumstances, objectives, etc.”
Although structuring drawdown in phases is more complicated, he added, it is not beyond individual investors’ capabilities to use it and they may have taken advice in the past.
“We shouldn’t assume that because they are execution-only they never take advice,” he said.