However, Darius McDermott, managing director at Chelsea Financial Services, disagrees. He says: “As a client nears retirement, it’s an idea to have less stock market exposure as stocks are more volatile.
“As we have experienced over the past couple of decades, stock markets can undergo significant corrections, and they don’t care if someone is about to retire. Stock markets do recover, but it can take time, and it can hit a portfolio, especially if you are just about to start taking an income.”
Mr McDermott adds if a client has a reasonable pot of money, and is looking at converting it to an income-paying strategy, asset allocation is likely to be changing anyway, depending on both the client’s attitude to risk and the income available: “For example, at the moment, dividends are being cut right, left and centre, and both government and corporate bonds are not yielding much.”
This highlights the fact the old ways of picking a pension and sticking with it have indeed changed.
David Thorpe is special projects editor at Financial Adviser and FTAdviser