Investment management company 7IM has launched a retirement income solution (RIS) on its platform.
RIS is a solution for financial advisers designed to support their clients’ retirement plans by giving them the confidence that their retirement income can be maintained but also the flexibility to adapt when personal circumstances change.
The solution uses a ‘bucketing’ approach, which takes all of the client’s selected assets and treats them as a single portfolio that is aligned with their risk profile. Investments are then allocated into a series of ‘buckets’ invested across three time horizons: short, medium and long term.
The long-term and medium-term buckets aim to provide capital growth and therefore contain more higher-risk investments. The short-term buckets are invested in lower-risk assets relative to the rest of the portfolio.
Alongside the three investment buckets is a cash bucket, which is there to provide another year of income during periods of market downturn, therefore delaying the need to sell down and crystallise losses from the investment buckets.
The solution also provides financial advisers with tools to keep clients informed about their retirement portfolio, including a personalised report.
In launching RIS on its platform, 7IM has partnered with DFM firms EQ Investors, RBC Brewin Dolphin, Omnis Investments and will be working with others to offer their investment solutions alongside 7IM’s own.
Minefield of potential pitfalls
Verona Kenny, managing director of intermediary at 7IM, said: “I’m truly excited that we have got together with our current partners, EQ, Omnis and Just, as well as RBC Brewin Dolphin, to help solve the overall retirement puzzle.
“Since the introduction of pension freedoms, people have had more control over – and decisions to make about – their pension pots than ever before. But that increased freedom has also introduced a minefield of potential pitfalls that could leave people with not enough money to see them through retirement. Yet despite this, as an industry, we haven’t really all worked together to collectively help retirees navigate these challenges.
“That’s why we have got together with several key partners to launch the 7IM RIS. The 7IM RIS has been designed to support the retirement plans that advisers have created with clients. It provides greater control over clients’ income in retirement while mitigating many of the pitfalls associated with income drawdown so adviser can feel confident that their clients’ money should last the distance and can adapt to the ever-changing world. We have focussed on not just delivering a flexible and innovative solution but we are delivering this in an engaging manner for advisers and critically their clients.
“The Financial Conduct Authority (FCA) has been clear with Consumer Duty and more recently the proposed thematic review into retirement income advice that advisers need to be able to clearly demonstrate how they are supporting clients to reach their desired outcomes. The 7IM RIS provides a robust and repeatable framework to do just that – and we believe it’s a key piece in helping to solve an increasingly complex retirement puzzle.”
