AXA Wealth is combining its pensions and investment expertise to offer a financial planning model: Retirement LifePlanning, which will give advisers and their clients complete flexibility and freedom in the way they manage income and access capital in retirement.
The new model is detailed in a report1, commissioned by AXA Wealth from independent global consultancy Milliman, and provides advisers with a ‘bucket’ approach to break down their clients’ financial needs in retirement. And will help mitigate the Big Four retirement risks:
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longevity: by offering access to income guarantees, advisers can reassure clients that the essentials like food and housing will be covered for life
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volatility: diversified investments can help reduce the impact of market volatility over time, while a cash holding can be used to fund ‘discretionary spend’ over the shorter term so that people don’t have to worry about more immediate market movements
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inflation: these investments also aim to provide asset growth over time to meet ongoing discretionary spend and aim to protect income from falling in real terms
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lack of flexibility: by investing through products that offer greater access, people can plan to cover their known income needs, without worrying that their money is locked away in their pension when they need it.
David Thompson, managing director of business development and proposition, AXA Wealth, said:
“We fully support the increased financial freedom and choice people will have in retirement after April, but recognise the burden of risk has firmly moved to the consumer. In retirement the financial risks people face are different to when they are working. With the opportunity to add more money to their savings largely gone, how people will spend the money they have built up while working will matter greatly. When it comes to spending before retirement people tend to group different needs into different ‘buckets’, for example essentials such as food and housing will be in a different bucket to the nice-to-haves, such as a holiday or shopping spree. This is no different in retirement.
“Our approach to retirement is simple: by helping advisers minimise the impact of the four big retirement risks on their clients’ investments, we are able to help people achieve the retirement they want. Our Retirement LifePlanning approach will offer advisers and their clients the flexibility they want to make the most of the new rules, with the guarantee they demand to cover the essentials and the tools to help them plan for the future.
“Planning for retirement is complicated and there is a great deal to consider. People should seek professional financial advice to help them make the most of the new rules. And our role as a provider is to ensure that investing is made clearer, more transparent and as easy as possible for advisers and their clients.”
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