Expert: Ben Palmer, Lead Sustainable Portfolio Manager, LGT Wealth Management UK Facilitator: Roderic Rennison, Partner, Catalyst Partners
Headlines:
- Importance of nuanced client risk profiling, considering life events, wealth levels, and personal circumstances beyond numerical scores
- Debate on tailored investment strategies for decumulation, emphasising flexibility, income needs, tax efficiency, and legacy planning
- Challenges in defining sustainable withdrawal rates, with focus on life expectancy, market volatility, and potential long-term care needs
- Tax-efficient drawdown strategies and legacy planning discussed, addressing tax wrappers, allowances, and estate considerations
- Strategies for servicing clients across wealth levels, including technology, junior advisers, and maintaining future high-value relationships
- Exploration of specialised platforms for decumulation clients, as firms separate accumulation and decumulation solutions
- Evaluation of scalable, tiered service models and junior adviser use to meet varying client needs
- Review of holistic risk profiling approaches, integrating client circumstances, goals, and capacity for loss
- Consideration of sustainable withdrawal rate modelling to align with longevity and regulatory expectations
- Assessment of tax-efficient drawdown and legacy planning for compliance and evolving regulatory scrutiny
- Industry trends in wealth transfer dynamics by generation and gender, assessing firm readiness for shifting demographics
Discussion points:
Risk Profiling and Client Attitudes
The conversation delves into the complexities of assessing client risk tolerance and how attitudes towards risk can vary based on factors such as life events, wealth levels, and personal circumstances. Participants share their experiences with risk profiling questionnaires and the limitations of relying solely on numerical scores. They emphasise the importance of understanding the client's overall situation, goals, and capacity for loss when determining an appropriate risk level for their investments.
Investment Strategies for Decumulation
The discussion explores different investment approaches and considerations for clients in the decumulation phase of retirement. Participants debate the merits of using dedicated decumulation investment solutions versus adapting existing accumulation strategies. They highlight the need for flexibility and tailored solutions that account for factors such as income requirements, time horizons, tax efficiency, and legacy planning. The conversation also touches on the role of natural income, fixed income, and equity exposure in retirement portfolios.
Sustainable Withdrawal Rates and Longevity Planning
Participants discuss the challenges of determining sustainable withdrawal rates for clients in retirement, considering factors such as life expectancy, potential long-term care needs, and the impact of market volatility on portfolio sustainability. They share different approaches to modelling and stress-testing withdrawal strategies, as well as the importance of regularly reviewing and adjusting plans based on changing circumstances.
Tax-Efficient Drawdown and Legacy Planning
The conversation explores strategies for tax-efficient drawdown of retirement assets, including the use of various tax wrappers, allowances, and estate planning tools. Participants share their experiences with clients' desires to leave legacies for their children or other beneficiaries and how this factors into retirement income planning. The discussion also touches on the potential regulatory scrutiny surrounding certain tax planning strategies.
Servicing Clients with Varying Wealth Levels
Participants discuss the challenges and considerations involved in servicing clients with different levels of wealth, from those with modest assets to high-net-worth individuals. They share their approaches to determining which clients are economically viable to service, the potential for leveraging technology and junior advisers to scale service delivery, and the importance of maintaining relationships with clients who may inherit significant wealth in the future.
Key takeaways:
- Explore the use of different investment platforms or solutions tailored specifically for decumulation clients, as some firms are separating accumulation and decumulation platforms to access specialised fund selections
- Investigate the potential for offering tiered service models or leveraging junior advisers to provide scalable service delivery for clients with varying levels of wealth
- Review and update risk profiling processes to incorporate a more holistic assessment of client circumstances, goals, and capacity for loss, rather than relying solely on numerical risk scores
- Evaluate the firm's approach to sustainable withdrawal rate modelling, considering factors such as longevity, market volatility, and potential long-term care needs, and ensure alignment with regulatory expectations
- Assess the firm's tax-efficient drawdown strategies and legacy planning offerings, ensuring compliance with current regulations and considering potential regulatory scrutiny in certain areas
- Explore educational resources and industry trends related to the evolving dynamics of wealth transfer between generations and genders, and assess the firm's readiness to serve these changing client demographics effectively
