Pensions  

How should a client close to retirement asset allocate?

  • Describe the importance of good asset allocation
  • Explain how to achieve this with the use of alternative assets
  • Identify the key areas to be aware of to ensure your client's aims are achieved
CPD
Approx.30min

Check, check and check again

After the asset allocation has been set for the client and the investments considered suitable have been selected, it is important to give this strategy time to develop. A client may start to get twitchy at the first sign of volatility, but remind them investments should be held for years, and that one bout of volatility over a decade is not unexpected. 

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That said, circumstances can change, and a client may wish for something different in retirement to what they originally discussed with you. Assessing attitude to risk is not a one and done exercise so there has to be regular contact with the client to ensure everything is on track. Furthermore, conducting regular analysis to consider the prospects for different asset classes, geographies, funds and companies to ascertain whether the investment case for each remains intact is crucial too and will give a client faith in your convictions and expertise too, all the while building trust as you get to one of the most important junctures in the relationship. Having a plan is important but not one set in stone. Flexibility to change is vital.

Monitoring is a constant process, but you should avoid overtrading. Adjustments can be made at set intervals, unless there is some drastic change that requires action.

Investing is not for everyone and part of the role of an intermediary is to instil a level of confidence in a client that the plan is working and that the adviser is alert to the risks in the market. It can be a challenge to decide how to allocate investments between various asset classes and geographies as a client approaches retirement as it feels there is a lot on the line. 

However, paying close attention to the risks, a client’s circumstances and the changing investment landscape should allow the benefits to bear fruit over the decade.

One decade may not seem like a long time, but it is enough for the wonders of compound growth to work its magic and make a huge difference to a client’s personal financial situation. 

David Miller, is investment director at Quilter Cheviot

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. According to the author, what has made the focus on investment in the last 10 years of accumulation more important?

  2. Why is the current inflation rate less helpful than it might seem, according to the article??

  3. According to the author, why should advisers be considering alternative assets for their client portfolios more often?

  4. According to the author, what is the first step to planning a client’s last 10 years of accumulation?

  5. According to the author, how do you decide how hard a client’s money needs to work in the lead up to retirement?

  6. According to the author, what is important in establishing an asset allocation strategy for clients in the last decade before retirement?

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  • Describe the importance of good asset allocation
  • Explain how to achieve this with the use of alternative assets
  • Identify the key areas to be aware of to ensure your client's aims are achieved

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