Why Brooks Macdonald’s retirement strategies could be timelier than ever

With sweeping demographic change and evolving regulation reshaping retirement planning, advisers are being called upon to do more than ever to help clients navigate decumulation with confidence. As the focus shifts from building wealth to drawing sustainable income, Brooks Macdonald tell us how their innovative Retirement Strategies have been designed to meet this challenge head-on. Built around adviser feedback, they help to bring clarity, choice and confidence to retirement income planning, helping advisers to support clients with flexible solutions tailored to their needs today and for the years ahead.

With significant updates in the policy and regulatory space, the need to provide trusted financial advice around retirement strategies is greater than ever.

Retirement Income planning is more important than ever. According to the Office for National Statistics (ONS), within the next 15 years the UK population aged 65 and over is projected to increase to nearly a quarter of our population. Yet, according to the FCA, only 9% of the UK population receive regulated financial advice.

Planning for retirement brings growing complexity. The FCA’s thematic review on retirement income underscores the importance for advisers to have a defined, differentiated and robust Centralised Retirement Proposition (CRP) to meet the specific needs and risks of clients entering retirement. With this comes the need for greater due diligence to ensure you are meeting your regulatory obligations and can demonstrate that the solutions you offer your clients can deliver good outcomes.

As you build an effective CRP for your clients, you may want to consider some key questions such as:

1. Do you have a named and consistent approach to retirement income?
2. Within that named approach, how do they manage risks associated with retirement?
3. Is there demonstrable evidence that the approach works?
4. Can you show price and value to meet Consumer Duty requirements?
5. What is the governance and oversight of the approach?
6. Is this approach accessible to all clients?
7. Is there independent, external validation endorsing the approach?

Development of the Brooks Macdonald Retirement Strategies was based on adviser feedback

Now with a greater proportion of the population at or in retirement there is a need for advice firms to be able to offer something different in the post-retirement space. Because investing during retirement brings a different set of challenges compared to accumulating wealth. Investment solutions need to cater for the additional risks of longevity, inflation and sequencing risk.

Decumulation, the process of turning retirement savings into a steady income stream presents unique challenges and opportunities and requires careful planning to ensure clients don’t outlive their savings, as well as considering factors like sequencing, and inflation. Advisers can help clients understand the key risks and employ flexible strategies to help achieve a secure and fulfilling retirement.

How Brooks Macdonald’s retirement strategies embrace the future of retirement planning

Development of the Brooks Macdonald Retirement Strategies was based on adviser feedback and addresses what we think matters most to clients – a strategy tailored to their specific income needs, mitigating sequencing risk, whilst retaining the potential for longer-term growth.

As the retirement landscape grows more complex and demand for flexible income solutions rises, Brooks Macdonald’s Retirement Strategies offer advisers a timely way to meet evolving client needs, particularly as demand grows for hybrid products. The strategies meet the need of being clear and distinct as to what the CRP element of the proposition will deliver.

With a greater proportion of the population at or in retirement there is a need for advice firms to be able to offer something different in the post-retirement space.

In supporting advisers our intention is to provide clarity, confidence and choice. Clarity in our investment approach and how this works to manage the risks when taking retirement income. Confidence in understanding the risks in retirement and reassurance with our experience of helping your clients at this stage of their life. Choice in providing three distinct retirement strategies for your clients, to cater for a broad array of client circumstances and the ability to align with your business operating model.

The Bespoke strategy is a highly personalised solution for clients who have more complex needs, whether it be a greater level of income flexibility, the management of multiple tax wrappers or specific preferences on how their longer-term funds are invested.

The Tailored strategy is a cost effective solution which aligns the portfolio with a set withdrawal rate from a single wrapper such as a SIPP.

Our Modelled strategy is platform based and uniquely combines a short-term component aligned with a set withdrawal rate with a longer-term growth component in a simple MPS solution.

Financial plans for clients in drawdown must address three key risks: sequencing, longevity, and inflation. Sequencing risk – the risk that the timing of withdrawals can negatively impact an investor’s overall return – is often the primary challenge. Addressing sequencing helps clients to stay invested for the long term and can improve their ability to manage other longevity and inflation related risks.

The Brooks Macdonald Retirement Strategies aim to provide security of income by actively managing these risks. They uniquely combine two strategies within a single account – one focused on the first seven years in retirement when the timing of withdrawals tends to have a greater impact on long-term returns, and another focused on growth for the longer term beyond year seven.

Supporting you to help your clients

At Brooks Macdonald, we support advisers with the insights, tools and expertise to deliver personalised retirement solutions. With Brooks Macdonald as your partner, you can benefit from our range of solutions, offering retirement income options for different segments of your client base and delivering personalised, expert-led retirement strategies.

The Brooks Macdonald Retirement Strategies. Bringing clarity, choice and confidence for you and your clients.

Click here to find out more about the Brooks Macdonald Retirement Strategies: bringing clarity, choice and confidence for you and your clients.

Important information

The information in this document does not constitute advice or a recommendation and you should not make any investment decisions on the basis of it. Investors should be aware that the price of investments and the income from them can go down as well as up and that neither is guaranteed. Investors may not get back the amount invested. Past performance is not a reliable indicator of future results. Tax treatment depends on individual circumstances and may be subject to change in the future. Please be aware that the Bespoke Strategy and Tailored Strategy utilises structured products as part of the portfolio construction strategy which comes with specific risks. Should the counterparty fail, investors may not have access to the Financial Services Compensation Scheme (FSCS). Brooks Macdonald does not provide tax advice and independent professional advice should be sought.