By Andrew Lewis, Brooks Macdonald
As the Senior Investment Director, Head of Wales and South West at Brooks Macdonald, I work to understand the challenges financial advisers face when planning retirement income for their clients. The landscape is constantly evolving, and it’s crucial to stay ahead of the curve.
Understanding the changing landscape
The retirement income landscape is shifting, and it’s essential to understand the factors at play:
- Economic volatility and market fluctuations: We’ve all seen how market fluctuations and economic conditions can impact investments. Inflation and interest rates, in particular, can significantly affect retirement income.
- Increased life expectancy: With people living longer, their retirement savings need to last longer. Retirement income strategies need to take longevity risk into account to help a client’s income last throughout retirement.
- Regulatory changes: It’s essential to stay informed and adaptable to new regulations and policies affecting our retirement planning strategies. The Financial Conduct Authority (FCA) has faced significant scrutiny and upheaval recently, adding another layer of complexity to our planning efforts.
These changes mean we need to adopt a more nuanced approach to retirement income planning, moving beyond traditional methods.
The importance of a tailored approach
A one-size-fits-all strategy is no longer sufficient. Every client’s retirement is different, and we believe a tailored approach is better suited to effectively manage the unique risks associated with retirement income:
- Longevity risk: The risk of outliving one’s savings requires strategies to help provide a steady income stream throughout retirement.
- Sequencing risk: The risk of a large loss experienced early in retirement can lead to savings running out more quickly even if longer-term returns are good.
- Inflation risk: Inflation can erode the purchasing power of retirement savings, necessitating investments that can keep pace with rising costs.
Staying nimble with asset allocation
In times of economic volatility, it’s more important than ever to be nimble and take an active approach to asset allocation. This means being cautious with bond durations and focusing on quality investments that can withstand market fluctuations. By actively managing assets, we can better position our clients to navigate the uncertainties of the market.
Our innovation and solutions
At Brooks Macdonald, we’ve been focusing on managing retirement risks for over seven years, launching our decumulation service in 2018. Our commitment to innovation and deep understanding of these risks allows us to offer effective solutions that cater to diverse client needs. We provide a range of options to help clients select the strategy that best fits their circumstances. These include highly tailored services for individual needs, flexible strategies that can support both accumulation and decumulation, and structured approaches that balance personalised and standardised solutions.
Looking ahead
With the ever-evolving retirement income landscape, it’s more important than ever to stay informed and adaptable. A tailored approach to retirement income planning is crucial for ensuring clients’ financial security. For more information on how we can help, feel free to reach out.
About Andrew Lewis
Andrew joined Brooks Macdonald in 2017 and is responsible for the management and development of our offices in Wales and the South West. He has over 15 years of experience in financial services. Prior to joining Brooks Macdonald, Andrew worked at Brewin Dolphin in Cardiff where, as a Divisional Director, he headed an investment team providing discretionary fund management solutions to financial advisers and their clients. Andrew is a Fellow of the Chartered Institute of Securities & Investment (CISI). He holds the CISI Private Client Investment Advice & Management Certificate, the CISI Diploma in Investment Compliance, and The Chartered Insurance Institute Financial Planning Certificate. He is also a former Welsh rugby international player making twenty-nine appearances for the Welsh national team and spent his entire club career playing at Cardiff.
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