Pension freedom and the removal of the requirement to buy an annuity means "planning for retirement now means planning through retirement", says RLAM head of multi-asset Trevor Greetham in this video interview.
Talking to Professional Adviser editor Julian Marr in the above video, Greetham (pictured) describes how pension freedom has brought about a "massive change" in consumers' approach to savings and investment.
Staying invested for longer and not necessarily making all investments through a pension plan are two such developments, he explains, adding: "Increasingly, with considerations such as the lifetime and annual allowances, people are also looking to ISAs to make tax-free savings.
"So you are seeing that combination of different wrappers but basically with the same underlying approach."
Demand for income
Asked how he sees pension freedom affecting the demand for income, Greetham is careful to define the terms of engagement.
"Income is a bit of a charged word," he says. "To me income in retirement is money you can spend. It is not necessarily 'natural income' generated from a high-yield bond or a high-yield equity - it is best thought of as 'drawdown'."
Greetham goes on to explain that, since multi-asset portfolios allow investors to easily choose different levels of risk, in combination with the right sort of financial planning tools, they can take out units, cash them in and spend the money.
"So you do not have to chase yield," he concludes. "In this environment of very low interest rates around the world, if you are going for something yielding 5%, 6%, 7% or 8%, it is probably quite risky.
"Better to stay diversified, cash units in and spend the money."
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