“To counter this, the best approach is a professionally managed portfolio of investment funds that individually access different investment sectors (as opposed to a single multi-asset fund that accesses different sectors).”
He adds: “This approach means that income withdrawals are captured from whichever asset class is showing most profit at that time, avoiding the problem of being forced to sell units at depressed market value.”
Proactive pensioner
Mr McGowan concludes: "Moving from accumulation to decumulation can often see a big change in priorities for investors. For many clients, the preservation of capital and the sustainability of income in retirement become more important than outright investment growth.
"In addition, investment markets can be volatile and a significant loss early in drawdown can have a much bigger impact on a client’s ability to sustain their income than losses later in retirement."
He adds: "Rather than take a reactionary approach to changing market events once the client is in decumulation, it’s actually better to be proactive and plan how much volatility and investment risk a client is prepared to tolerate. The products available on the market allow clients a huge range of choice in how much volatility and downside protection to build into investment strategies for decumulation.”
eleanor.duncan@ft.com
