Standard Life has today announced that it will offer a non-advised income drawdown proposition to try and take a slice of the newly invigorated drawdown market. They will offer a solution called the Standard Life Active Retirement product, which will provide access to a three pot model covering different risk levels.
Standard Life previously called on the industry to design a simplistic product for the ‘mass market’ which would allow those with little incline or a sufficient fund size to use a financial adviser, to enter drawdown. They made statements suggesting that the area of income drawdown was too complex to provide without qualified advice.
Now, it seems they have decided to answer their own calls and take a slice of the expected £700bn available from baby boomers in the next 10 years.
12/11/2015 – FCA to investigate non-advised drawdown
Their proposition is based on the common life styling concept which happens during the pension accumulation stage. This shifts riskier assets into more cautious assets as retirement approaches to prevent any major fluctuations in the final years. The post-retirement strategy will use a time horizon of the retiree and then apply a graduated reduction in risk over that time frame. A shorter time frame, will therefore be exposed to less overall risk than a longer one.
The three pot system will be weighted, very low risk, low risk and medium risk. The stated time horizon will depend how much of your fund is invested in each pot. With this type of arrangement the idea is that you’ll have access to the features of a drawdown pension but without any high exposure to volatility. This may be attractive for some who wish to protect the downside, but it is seriously going to limit upside potential.
According to FT Adviser, Jenny Hold, Head of investment solutions at Standard Life, said that retirement solutions must be designed to make pension funds last, whilst providing flexibility to take income.
“We recognise that people will use their retirement savings in a variety of ways and they need help building a portfolio to provide a regular income for the rest of their lives, for a fixed period of time, or to take ad hoc payments as and when needed.”
At Compare Drawdown, our research into the Standard Life Plan suggests that averagely, the ongoing cost of running this plan will be around 1.10% per annum. You don’t get control over where you investments are and you are not protected as this is a non-advised transaction.
In our view, you are paying over the odds for a non-advised service off the back of the Standard Life brand.
[…] Standard Life said it was its ‘fastest-selling solution ever’, little is known of its clients suitability and their full understand of the risks involved. […]