Royal London's wrap platform Ascentric has launched a tool allowing advisers to project the income from any portfolio, in what it says is a first of its kind.
Called the Income Forecaster, the tool was developed with FundsLibrary and projects expected yield from any combination of income funds in a portfolio over a 12-month period.
It automatically breaks down the income on a month-by-month basis, according to when the funds in question have paid out income in the past, basing its projections on detailed information of the funds' past yield supplied by FundsLibrary.
It allows advisers to model any combination of funds, calculating how much can be taken as income without drawing down on the underlying investments.
Jon Taylor, managing director of Ascentric, said pension freedoms, combined with low annuity rates, meant advisers were increasingly responsible for managing their clients income.
He said: "In the current environment of low interest rates it is increasingly important that advisers and clients have access to the right information to help navigate the challenges they face.
"The demand for generating income has never been higher and the Income Forecaster is an important step towards helping advisers better communicate how income can be generated for their clients."
While conceding that the forecasts were based on past yield, and were therefore not a fool-proof prediction, he said that the income funds included in the tool were low-volatility.
He said the majority of the investments covered by the Income Forecaster were managed funds, but a number of exchange traded funds were also included - or on the way to being included - and that in the longer run it could also include direct equities.
Chris Hughes, director of Crystal Wealth Management in Bristol said one benefit of the Income Forecaster was that it “simplifies the conversation with clients about their income”.
He said: “By visualising the income stream, it really helps to educate them on the nuances of their arrangements such as the timing of payments and the impact of withdrawals in a way that words alone can’t always do.”
The Income Forecaster is up and running, and free to users of the Ascentric platform.
Daren O'Brien, a financial adviser with Aurora Financial Solutions, welcomed the introduction of the Income Forecaster, saying it was "a long time coming".
He said such services were "really good value", adding: "I don't think enough platforms provide those easily understandable tools."
However, he pointed out that only very wealthy clients would be able to live on yield alone, and that most would have to draw down on their investments.
