46
SIMPLYBIZ INVESTMENT SERVICES
2 . LIFESTYLE : BALANCING INCOME WITH LIFESTYLE ASPIRATIONS
• Client needs : This category considers month-tomonth spending based on the lifestyle that each person wants to enjoy in retirement . There are two layers – essential spending and additional spending . One way to start thinking about the lifestyle component is to carry out cash flow analysis to map out cash needs in the future and the level of income needed to cover them .
3 . LIFETIME : ENSURE SAVINGS LAST AS LONG AS THEY NEED TO
• Client needs : No-one knows how long they will live for or when they may need to increase their month-tomonth spending . The lifetime planning component of our framework is designed to ensure retirees ’ savings can last as long as possible and explicitly addresses longevity risk .
• Investment implications : The idea of a guaranteed income later in life is likely to be very attractive . However , guaranteed income products need to be paid for upfront , so it is important to plan for that
• Investment considerations : Certainty of income needs to be weighed against flexibility . Guaranteed income products like annuities are potentially the right tool to use for this component if there is 100 % certainty of circumstances and future income needs . But people ’ s circumstances can change very quickly . This can be accounted for by investing in a blend of different income products to balance certainty with flexibility .
earlier on in a retirement journey . Alternatively , a more flexible income solution may be more appropriate . Assessing the required level of growth to reach one ’ s personal retirement goals is crucial , and the outcome of this analysis directly drives the types of products that are suitable . Investors can manage exposures themselves through individual investments or look to a multi asset fund or model with the appropriate risk and return characteristics .
4 . LIFE LEGACY : PAVING THE WAY FOR FUTURE GENERATIONS
• Client needs : Life legacy is a very personal part of retirement planning . It can range from passing on a property or a cash lump sum to future generations of a family , or creating a charitable legacy to benefit a cause that ’ s meaningful to the person . Whatever the legacy , planning properly is essential .
• Investment implications : The nature of the legacy impacts which products are most suitable . The majority of guaranteed income products are not able to be passed on , but some have better terms than others . Given those restrictions , using a more flexible income fund for income requirements could more easily allow that pot of money to be passed on after death . It ’ s also important to note that separating out the life legacy component can have a direct feedback loop to the products or approach taken in the other three component parts of the 4-Life framework , to ensure it is appropriate for the retirement goals of the retiree .
We believe the 4-Life framework helps put in place a robust retirement plan that explicitly addresses the risks people are increasingly facing as they seek to take control of their retirement path . These risks can be managed at an individual level or aggregated to build default options for pre-determined ‘ personas ’ within pension schemes .
At Invesco , we are dedicated to delivering innovative solutions that enable financial advisors to deliver improved outcomes for their clients in retirement .
TO UNDERSTAND MORE ABOUT OUR RETIREMENT SOLUTIONS , PLEASE VISIT OUR WEBSITE .
INVESTMENT RISKS
The value of investments and any income will fluctuate ( this may partly be the result of exchange rate fluctuations ) and investors may not get back the full amount invested .
IMPORTANT INFORMATION
This content is for Professional Clients only and is not for consumer use . This is marketing material and not financial advice . It is not intended as a recommendation to buy or sell any particular asset class , security or strategy . Regulatory requirements that require impartiality of investment / investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication . Views and opinions are based on current market conditions and are subject to change .
Invesco Asset Management Limited , Perpetual Park , Perpetual Park Drive , Henley-on-Thames , Oxfordshire RG9 1HH , UK . Authorised and regulated by the Financial Conduct Authority .
28.08.2024.3830918 EMEA