Kim Lerche-Thomson, founder and chief executive of Primetime Retirement, agrees a blended strategy can work well in that some retirees can have the opportunity to preserve and grow their investment in the longer term.
Yet he adds a note of caution: “It is important before using a blended strategy that advisers do a thorough review of their clients’ needs and assess their risk appetite.”
Downsides
There are some possible downsides to using a blended solution in particular, apart from the hazards of suitability, sustainability, taxation and sequencing risks that are covered in a different article to this guide.
For blended solutions especially, complexity and expense are the two major ones to consider.
The more flexibility there is on offer, and the greater the number of potential combinations, the more complicated the end retirement plan can become.
Ms Tait explains: “While hybrid products have the advantage of delivering a single income payment, the underlying product may be complicated or restrictive.”
It can also end up more expensive to create a range of solutions, on top of the initial or ongoing advice fee, investment management fees, product fees and any taxation that might arise at any particular time.
Mr Lerche-Thomsen adds: “While blended strategies help to diversify risk and provide some additional security compared with pure drawdown options, it is vital to evaluate whether a blended strategy will be the best option for retirees, based on their needs.”
But as Mr Folorunso comments, blended strategies are “client specific” so may be the only real option for some clients to ensure their needs are met.
He concludes: “There is no one-size-fits-all solution. It all depends on the client’s circumstances and all options being considered, using the facts known.
“It is all about knowing your client well.”
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