Dynamic Planner is to launch a service that will allow advisers to compare the performance of decumulation investment products on a monthly basis across the market.
In particular Dynamic Planner's new service will allow advisers to manage sequencing risk, which is the danger that the timing of withdrawals from a retirement account will have a negative impact on the overall rate of return available to the saver.
According to Dynamic Planner, the service will assess funds on both short-term and long-term volatility.
It examines each individual decumulation fund in the market in line with how the client is planning to take their money in retirement. This way the adviser can see which funds work best.
Chris Jones, proposition director at Dynamic Planner, said: “We are all more than familiar with the drivers behind the need for decumulation services and products, but, to date, only a handful of solutions have been launched and these are yet to enjoy the market share they deserve.
“In a rising market their unit price performance has not compared well with existing accumulation solutions but such a comparison fails to consider the needs and outcome of a target market needing to encash units on a monthly basis.
“We hope that by identifying those solutions that manage monthly risk and categorising them together a more fair and accurate comparison can be more easily made by advisers.”
The risk profiling business wants to help advisers navigate the problem that decumulation products are not comparing well against accumulation products due to the risks involved.
This comes after the introduction of pension freedoms in 2015, whereby savers have more flexibility when accessing their pension funds come retirement, has made planning decumulation more widespread and complex.
Mr Jones said: “Advisers have been able to research solutions that distribute an income and advise on portfolios that enable the client to take their regular withdrawals from cash for years. However, to date it has not been easy to research solutions from which it would be suitable to take regular monthly withdrawals by encashing units.
“Our risk managed decumulation service is the answer. It is unique in its approach as it focuses on sequencing risk by controlling the size of monthly losses - instead of looking at annual volatility.
“When a client introduces additional risk, by encashing units monthly to pay for a fixed capital withdrawal, this is managed more closely so that the annual risk to capital remains the same. As a result, capital is more likely to last longer.”
Jon Page, director at Neon Financial Planning, said any solution that helps advisers choose the best decumulation strategy for their clients would be welcomed.
Mr Page said: “We see lifetime financial planning as two halves, and they both have different needs requiring slightly different treatment. Our clients are broadly classed as accumulation (20-50), with decumulation likely to be on the minds of those 50 plus.