Senior Product Specialist
Andrew joined Keyridge Asset Management in 2015 and directly supports the portfolio managers with implementable ideas and support for the management of the multi asset range.
He has over 15 years' experience in financial services dealing with intermediaries, institutions and high net worth clients. Andrew is also a CFA Charterholder.
Can income funds help prepare for retirement?
Utilising an income fund with steady targeted dividend payments may help in preparing clients for retirement, while managing risks found at decumulation.
With an increasing focus on retirement income planning strategies following the FCA’s review, finding the right strategies for clients’ income needs and wrapping them into your investment proposition has been key for many firms.
In this guide, we compare two options at retirement: either switching back into a lower-risk drawdown portfolio (selling off units to provide an income) or providing enough units in the income fund to sustain the client for their needs without having to sell down.
At a glance:
Drip feeding into an income fund during accumulation:
Increased the chance of money lasting in decumulation for those who sold out and moved to a lower-risk fund at retirement
Provided a level of income from monthly dividend payments which covered what would have been taken from a drawdown portfolio without having to sell off units, reducing decumulation risks
Provided a future projection of income based on units held which could be discussed with the client annually to determine if it met their future income expectations