FE Investments has launched a range of portfolios for advisers with clients who want to decumulate their investments.
The model portfolio provider said the range will including two new portfolios, the initial income retirement portfolio and the long term retirement portfolio, in recognition of the different risks that decumulation clients face.
The first portfolio aims to protect investors from “sequencing risk”, when a large fall in the markets early in retirement can result in a significant devaluing of the client’s portfolio. It is designed with the preservation of capital as the primary concern, with a low correlation to equity markets.
The latter portfolio aims to protect investors from “shortfall risk”, when a client runs out of money during retirement. This portfolio will aim to grow capital in the short term through exposure to equity markets, and then target long term growth over an extended period.
Toyosi Lewis, retirement investment specialist at FE Investments, said having the right decumulation strategy in place for clients has never been more important for financial advisers.
“Many clients are still relying on accumulation solutions to manage drawdown, which don’t mitigate against the different risks they face in retirement.”
He added that advisers need to play an important role in helping clients to think differently about the risks they will face.
“Our decumulation portfolios are designed to mitigate these risks and help advisers satisfy their clients’ retirement objectives and tackle the twin challenge of income sustainability and sequencing risk,” he added.
The new portfolios are part of FE Investments’ efforts to increase its model portfolio service offering to serve a wider range of clients.
The portfolios will be available initially on Abrdn Wrap, 7IM, AJ Bell, Aviva, Embark, Hubwise, Praemium, Quilter and Transact.