Understanding how to manage investments in retirement has become an increasingly important challenge in recent years and advisers are very much at the forefront of this shift in client needs.

In a recent 7IM survey it was revealed that of 300 advisers asked, four fifths (78.6%) now either had solutions for clients post retirement, or thought that implementing one was needed.

Clearly then advisers are increasingly aware of the growing need to address their clients’ retirement plans, with 58.3% adding that they would like to use a Centralised Retirement Proposition (CRP) to help clients in retirement, much in the same way as the vast majority use centralised investment propositions when clients are in the accumulation phase.

However, that responsibility to clients in retirement is not made any easier by a dearth of suitable products, which has been highlighted by the FCA saying that there is lack of innovation in this area.

7IM believes it has a solution and the formula that can help advisers with their clients in retirement, in the most tax efficient manner, whilst crucially keeping the flexibility to adapt to ever changing client circumstances. 

The 7IM Retirement Income Service

After extensive research into the retirement market over the last few years, 7IM has recently developed its own proposition, called the 7IM Retirement Income Service (RIS) which incorporates investment science, investor behaviour and the requirements of the regulatory environment to ensure a consistent, robust approach to managing income for clients in retirement.

Instead of thinking simply in terms of managing a self-invested personal pension (SIPP), individual savings account (ISA) or a general investment account (GIA), 7IM splits the overall pot of money into 4 different time horizons or ‘pots’ (cash, low risk, medium risk and high risk) across the different tax wrappers depending on which are used up first.  

Importantly the cash and low risk element not only ensures that the client has ready income, but also a cash buffer to cover and mitigate against ‘sequence risk’ which we know can be highly damaging to clients in retirement.

The split of the assets between the pots is determined by the initial work that 7IM does with the adviser and their client – drawing on the adviser’s expertise in goal-setting and cash flow planning. This will also determine how much money goes into the near-term ‘cash pots’ to meet the client’s immediate income requirements and provide a cash buffer, and how much is targeted towards the longer term, whilst most crucially also keeping the client in the agreed risk mandate on an ongoing basis.

How is 7IM’s Retirement Income Service different?

While advisers may be used to rebalancing to a target asset allocation within a particular tax wrapper, the 7IM RIS does the work for them and rebalances across multiple sub-portfolios and tax wrappers to ensure the client’s specific goals are met, no matter their circumstances. This is simply something that no one else does and is another advantage of the 7IM Platform where advisers can hold multiple sub-portfolios across tax wrappers and report on them all at once.

On top of this, the multiple portfolios used in the tax wrappers can be endlessly customised, allowing for a truly personalised service that meets the client’s needs.

The key is the science and maths behind the service, which allows advisers to ‘plug & play’. The 7IM Retirement Matrix takes into account over 50,000 assumptions covering everything from longevity to desired withdrawal rate, to cost and inflation.  Back this all up with award winning technology and service including personalised RIS Client Reports and we can see the attraction.

This might look intimidating and different but the service actually uses already established investment strategies to achieve this and these have a long track record.

Importantly, all of this is based on a model and service which has already proven useful to 7IM and its own clients. It needs to be easy to administer, it needs to be cost effective, and it is needs to meet the highest regulatory standards. It has been designed to truly reflect the real circumstances people may find themselves in after retirement.

At DISCUS, we welcome 7IM’s approach and hope to see others approaching the challenge of building centralised retirement propositions that are built to last.

Why does this matter now more than ever?

A focus on this is long overdue due to the ever changing retirement market from pension freedoms, to the demise of DB schemes, to the fact that clients are living longer than ever before.

A client specific retirement plan is therefore a necessity, not a luxury, in order to manage this seismic shift in retirement.


This article was written for the DISCUS website by George Winters, Head of Intermediary Relationship Management for 7IM (Seven Investment Management). You can find out more about their investment services here ›