Financial information and technology business Defaqto has rolled out an income drawdown tool available via its financial planning software Defaqto Engage.
The workflow model is currently free to all existing Engage users.
It will allow advisers to see the impact that drawing a regular income from a pension can have on a client’s accumulated wealth.
Additionally, the tool factors in the “probability of volatile markets”, Defaqto said, as well as considering “the potential impact of sequencing risk.”
The firm added that not many software providers can offer sequence risk calculators among their tools, especially when it comes to drawdown.
Decumulation vs accumulation
Pan Andreas, head of insight and consulting for funds and DFM at Defaqto, said: “Our income drawdown workflow has been a long time in the making. This workflow provides a step-change in the right direction for advisers with clients in the decumulation phase.
“This year, in particular, has been challenging. But sequence risk always plays a role and advisers need tools that work seamlessly within their advice processes.
“The majority of investment workflows were originally designed to cater for the accumulation phase. As such, they mostly ignore the effect of sequencing risk when clients move to decumulation. They do little to highlight the appetite and capacity to bear income fluctuations when planning clients’ income in retirement.
“With our income drawdown workflow, advisers no longer have to create a fragmented report from several tools. Using an actuarial model, we’ve created an invaluable workflow that produces provider agnostic research specifically developed for decumulation.”
