PensionsApr 26 2022

Bordier launches decumulation service for Dynamic Planner

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Bordier launches decumulation service for Dynamic Planner

Specialist investment management firm Bordier UK has launched a new decumulation service mapped to Dynamic Planner risk profiles.

The firm announced that its risk targeted decumulation service now forms part of Dynamic Planner’s risk managed decumulation service. 

The new element of Bordier's risk targeted suite of solutions has been designed exclusively for advisers with clients in drawdown.

Bordier said following the introduction of the Pension Freedom Act 2015, investors are electing to draw an income from their investment portfolio as opposed to buying an annuity. 

The firm said this new service shifts the focus from performance-driven accumulation to investment strategies that put capital preservation first and seek to minimise the risk of eroding capital values in falling markets.

Mark Duggan, director of sales and marketing at Bordier UK, said: "Over the past decade, stock markets have helped drive capital returns; however, with growth easing, returns moderating, and the cost of living spiralling, we could see investors living increasingly off their capital, and therefore, putting significant emphasis on the management of sequencing risk. 

“The inherent risks associated with a client drawing a fixed regular income have been masked for many years by the generous bull markets we have experienced. However, now is the time for clients and their advisers to renew their focus on the risks associated with drawdown, and we are very supportive of the messaging around Dynamic Planner’s risk managed decumulation service.”

Duggan said there is “tremendous synergy” around the expected investment solutions in place and it aligns with the way Bordier already operates.

“Many of our clients have made their money, appreciate the benefits of having some market exposure, but do not want to see their capital values decline and cannot afford to see the spending power of their pots fall significantly,” he added. 

In addition, Christian Markwick, head of adviser support at Apricity Compliance, said the benefits that pension freedoms brought to the adviser community have over time also presented significant challenges in how differently firms need to approach running money in decumulation to accumulation, and “highlighted the need for a robust central retirement proposition to be put in place.”

He said: “It’s great to see new services such as the risk targeted decumulation service coming to market to support advisers and their clients with this ever more important part of financial planning. 

“From conversations we have on a regular basis with firms, this area of research and due diligence is still very much a work in progress: solutions to problems like these, from Bordier UK, will no doubt be welcomed by many in the decumulation space.” 

The strategies

The launch offers three actively managed investment strategies with different levels of risk and expected return, each being targeted to a particular Dynamic Planner decumulation risk profile. 

The firm said Dynamic Planner ensures that risk is being managed and mitigated appropriately and that each strategy is continually risk targeted via a detailed four-stage process.

This process involves the setting of a monthly value at risk limit for each risk profile, alongside an in-depth analysis of each investment strategies’ objectives, tactical and strategic asset allocation parameters, and monthly oversight of the underlying holdings. 

As part of Dynamic Planner’s service, the volatility of each strategy is targeted to stay within the monthly value at risk boundaries assigned to specific risk profiles. 

Bordier said this provides peace of mind for advisers harbouring concerns over risk-profiled solutions – which can sometimes drift outside of their risk band, or are at risk of a change in rating.

Chris Jones, proposition director at Dynamic Planner, said: “With so many more people needing to use their pensions and investments to meet their spending needs, it is essential that advisers are provided with solutions that meet the needs of that group of clients at every stage to ensure a good client outcome. 

“We are therefore delighted that Bordier UK, with its long global history, has identified this target market, recognised the risks, and used its capabilities and experience to build new solutions that manage out those risks on behalf of advisers and their clients. In an uncertain and increasingly expensive world I hope these solutions bring some certainty and comfort to decumulating investors.” 

sonia.rach@ft.com

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