Dynamic Planner said the coronavirus volatility has highlighted how decumulation portfolios can sell significantly less units to meet regular income needs compared with accumulation alternatives.
In January, the firm announced it was launching the Risk Managed Decumulation (RMD) Service, which would provide a purple badge for participating funds that will sit alongside the gold badge for risk-profiled funds or the burgundy badge for risk-targeted funds.
The service officially launches on 3 April 2020 with seven asset managers already signed up.
UBS and JP Morgan Asset Management had already been named when the service was unveiled, and our sister publication Portfolio Adviser revealed that Columbia Threadneedle, Church House Investments and LV= will also be on board at launch.
The service focuses on monthly risk over annual risk.
Coronavirus woes
“No doubt recent events will bring this area of advice to the fore and we are determined to support advisers with leading edge investment analysis and cashflow modelling tools,” said Dynamic Planner proposition director Chris Jones.
Looking at the year to date, Dynamic Planner noted investing via the Dynamic Planner 5 index would mean a portfolio worth £240,000 ($297,422, €268,938) at the start of the year would have to sell down almost 20% more units by March than those funds that are part of its RMD service.
Dynamic Planner said the service lets advisers compare decumulation solutions for performance and charges rather than lumping them together with other solutions.
UBS head of UK retail Nick Webb said: “The current volatility in the markets serves as a reminder that sequence of returns are painful, especially if clients income is provided through unit encashment.”
Webb added: “By looking at the solution’s objectives, the holdings together with the tactical and strategic asset allocations a far greater picture can be gained as to the viability of a given solution to provide the optimal client outcome.
“Following FCA Prod guidelines, UBS launched its two decumulation products with this in mind.”
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