Claire Altman, managing director for Individual Retirement Solutions at Standard Life
Retirement planning is becoming increasingly complex. Advisers find themselves having much deeper relationships with their clients as clients face a range of obstacles such as volatile investment markets and inflation, as well as sequencing and decumulation risks.
One of the greatest threats to a comfortable retirement is sequencing risk. If a pension pot being preserved or used for drawdown suffers significant losses in a sudden market downturn, recouping those losses is a challenge in the later stages of a working life or in retirement itself. Continued market volatility can lead to a further downward spiral, potentially depleting a portfolio before it has enough time for meaningful recovery. This can jeopardise a client's retirement security. However, smoothed funds can offer a valuable buffer against such a scenario.
"Smoothing helps to counter market ups and downs, so clients are less likely to withdraw their funds at a sub-optimal time," says Altman. "They're more likely to stay invested for the long term, because even if markets drop then the full impact of that drop isn't passed onto them – the client's investment is cushioned by smoothing. Thanks to a smoother investment journey, clients are more likely to remain invested and achieve investment growth over time."
The need for product innovation
"One of the key issues we currently face as an industry is ensuring good outcomes for people at retirement. This is at the very heart of the need for innovation and an important driver of why we delivered a smoothed fund for advisers to offer to their clients," says Altman.
"In addition to meeting the need for more flexible investment products, smoothed funds offer growth without the same level of volatility that can cause investment-related anxiety among some clients. In a world where people are living for longer and market volatility is a persistent feature, I believe that makes it a valuable addition to retirement portfolios."
Brought to you by Professional Adviser in association with Standard Life. By clicking "Read Here" you agree to the data protection statement below.
DATA PROTECTION STATEMENT
Your privacy policy – please read carefully:
We set out below how and the basis under which we, Incisive Media*, will communicate with you. In our Privacy Policy we explain how we may use your data.
For subscriptions, events, sponsored content and resources, we will use the lawful basis of 'legitimate interests' and we will use the contact details supplied to us to market to you regarding your trial or subscription, reader research, events and other related products. You will always be offered the option to change your contact preferences. Where you request a whitepaper or content published by one of our third party partners or attend a sponsored event which Incisive Media hosts, we will identify the third party or sponsors to you at the time and then pass on your contact details to them. They will contact you directly and their use of your data will be governed by their own privacy policy. Events may attract additional sponsors after bookings have opened and after the date you have signed up to attend, but we will identify all sponsors to you by email before the event.
