What does good protection look like?
It may seem obvious but central to finding a solution is fully understanding your client, so that the service provided is catered to their unique circumstances and risk appetite. When choosing the right strategy for your client, things to consider include:
- Protection that increases with the portfolio value, not simply on the initial investment itself. This can deliver the ability to lock in the upside rather than simply protect from the downside.
- Choosing a portfolio that offers volatility control, to minimise the impact of significant market shifts.
- Seeking lower cost protection - while historic protected portfolios had ongoing charges (OCFs) of circa 4 per cent, they are now available with OCFs of sub 1.5 per cent.
Despite the change in landscape, what customers want when they are setting aside funds for their pension has remained largely unchanged over time.
They are, for the most part, risk averse, or conservative in their appetite, seeking a certain amount of protection for some return.
In the changing work and pension environment it is up to wealth advisers to factor in the new challenges that this brings to approaching their strategies, to ensure that they deliver on their customers’ needs while balancing their appetite for risk and returns.
Mark Evans is business development director at Tavistock Investments