Canada Life Asset Management Portfolio Funds offer a straightforward and cost-effective solution to the challenge of choosing a mix of investments to suit the investment needs of a broad range of clients. They offer you simplicity, significant time savings and – crucially – the reassurance that the funds will remain appropriate for the risk appetites of your clients over time.

The range comprises five globally diversified fund of funds aligned to Dynamic Planner’s risk profiles 3 to 7. The Portfolio Funds access the investment expertise of Canada Life Asset Management in-house fund range, allowing the funds to offer competitive charging structures.

They are available within a wide selection of wrappers, which now includes OEICs, ISAs, ISA transfers, Pensions, offshore and onshore bonds.

Canada Life Asset Management has more than ten years of proven capability in risk-targeted fund management. Canlife Portfolio Funds 4 to 7 launched in March 2008, with Canlife Portfolio 3 added in March 2012. This capability was extended in November 2013, with the launch of OEIC fund versions, the LF Canlife Portfolio Funds III to VII and the Canlife Portfolio TRA Pension funds which were released in May 2018. Both the OEIC and Life & TRA Pension ranges share the same fund managers, investment process, philosophy, asset allocation and underlying holdings.

In December 2018 the Life portfolio funds directly invested into the equivalent OEIC funds. Prior to this, the Life funds invested through other Life funds through a fund of funds structure.

In March 2019 the Canlife Index Portfolio’s 3-7 were launched.

The risk-targeted portfolios at a glance

We have two ranges of risk-targeted portfolios – an active range and a passive range. Within each range, there are five portfolios. They are ready-made, cost effective solutions delivering ongoing suitability for your clients. Each portfolio invests in a range of geographies and asset classes and is closely managed to a defined risk/reward profile, aiming to align to Dynamic Planner’s asset allocation for risk profiles 3 to 7. Each portfolio is monitored daily to ensure it achieves its aims and Dynamic Planner Risk Profile allocations. If necessary, they are rebalanced.

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Drawing down from capital is inevitable for nearly all of us once we are in retirement. According to the industry regulator, the FCA, the average UK pension pot entering drawdown is £123,000, underlining that belief.

More and more of us will face this conundrum in future, with estimates forecasting that there will be more than 20 million of us over the age of 60 in the UK by 2030.

The challenge for firms here is clear, but it has been exacerbated by too few products attempting to address this issue. In January 2019, the FCA Sector Views commented: “There has been little in the way of product innovation in retirement income products since pension freedoms came into force.”

What is the answer then, for your clients to drawdown on capital most efficiently?[/vc_column_text][/vc_column][/vc_row][vc_row type=”in_container” full_screen_row_position=”middle” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″ shape_divider_position=”bottom” bg_image_animation=”none”][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_link_target=”_self” column_shadow=”none” column_border_radius=”none” width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][vc_column_text]

Key #1: Know your client’s risk profile

The first key is accurately understanding a client’s risk profile, in the context of a risk-based cashflow plan. Do this well and you create a solid foundation for all subsequent decisions made. Do it badly and the risks for the client and indeed for the advice firm are higher in decumulation than accumulation for obvious reasons.

The risk profiling exercise, encompassing capacity for risk, investor experience and, of course, attitude, really must form part of a risk-based cashflow plan.

Ensuring that helps clients understand what their ‘must-haves’ are and which cannot be put at risk – e.g. ‘heat and eat’ – as well as what more discretionary items like travel might take to fund.

A drawdown client’s financial plan needs to address longevity risk and the possible – and potentially high – impact of long-term care costs. This all needs to be completed on a real not nominal basis.

Key #2: The trade-off with a selected investment

A second key is to consider carefully the trade-offs with any investment solution. These chiefly include:

• The absolute level and consistency of income paid out
• The risk of capital erosion, i.e. whether income is being paid at the expense of capital
• The value at risk, i.e. exposure to higher absolute losses
• The total return over time in terms of income and capital appreciation

Key #3: Sequence of returns risk

A third and final key is managing sequence of returns risk. But what exactly is that?

In essence, sequence of returns risk is the difference in capital value that a client receives if they take a fixed withdrawal and begin their investment journey in rising markets – compared to the same returns but in a different order and in falling markets.

At Dynamic Planner, we completed some research into sequence of returns risk, looking at the example of a popular multi-asset fund – a Risk Profile 4 on our 1-10 risk scale – and how it performed in drawdown over a period of seven years.

In the example, of a £100k portfolio and withdrawing £420 a month (5%), we discovered a final figure at the end of the timeframe ranging between £90k and £140k, depending upon the sequencing of returns. In brief, a big difference.

What are the key takeaways from this?

Monitor that investments target the level of risk agreed with the client – to ensure that the risk to capital remains the same – on a monthly basis. Doing this on an annual basis is too infrequent. By risk targeting diligently each month, a solution’s ability to deviate from its risk profile is reduced and so too are potential losses for the client if performance dips.

When a client in drawdown introduces unavoidable additional risk to their portfolio, by encashing units monthly to pay for a fixed capital withdrawal, this is effectively managed more closely. As a result, a client’s capital is likely to last longer – and we could all use a few extra pounds in our pocket at the end of the month, whatever our stage of life.[/vc_column_text][/vc_column][/vc_row]

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Saving time and increasing efficiencies is fundamental to ensuring your firm is profitable and sustainable as a business moving forward today.

But how do you accomplish that without cutting corners and having your conscious nag you at night that an accident is waiting to happen when you return to work in the morning?

And how can you be more efficient when you are only faced with increasing demands from the industry regulator, which must be followed to the letter?

Dynamic Planner is today integrated with 22 leading platforms and providers to save you and your firm time and enable you to ensure your clients’ data is accurate and up to date.

Our latest valuations integration has recently been released with platform Novia, arriving in the wake of February’s announcement, earlier this year, that Royal London and Vitality were added to our growing list of integration partners.

As one of our valued users put it: “Long gone are the days of searching for ISIN codes to work out unit prices.”

Our new integration with Novia allows you, at the click of a button, to pull through all of a client’s latest investment and retirement holdings on the platform, direct from the source – removing the effort of finding valuations manually. Your time is then freed to focus, for example, on whether a client’s portfolio requires rebalancing in line with their risk profile.

All you need to pull across a client’s valuations – ISA’s, GIA’s, offshore bonds and SIPP’s – is the correct policy or account number. The rest is done for you. No stress, no hassle and no waking up at night fearing the worst tomorrow.

Why Novia? Like us, it is award-winning and independent, offering you unfettered access to market-leading technology solutions.

Novia also is growing and fast, reporting fantastic figures for year-end 2017 and 2018. Novia’s assets under management [AUM] rose to £6.1bn by the end of 2018, following 20 per cent-plus growth in AUM to year-end 2017.

Today, Novia boasts more than 350 fund managers and more than 70 discretionary fund managers, constantly increasing the ranges available to you and your clients.

The opportunity to partner with Novia was perfect to only further help increase efficiencies at your firm and maximise the best possible outcomes for the clients you serve.

Our vision at Dynamic Planner has long been to make suitable investments and advice accessible to everyone. As a result, we – like Novia – are continually evolving in pursuit of that ambition.

We are here to support you, your firm and ultimately your clients’ outcomes for the long haul – providing peace of mind we could all happily use when we finally close our eyes at night.

Find out more about how Dynamic Planner’s integrations can help save you and your firm time and money.[/vc_column_text][/vc_column][/vc_row]