Elston Consulting has launched a blended income solution for advisers and discretionary fund managers (DFM).
The Annuity Glidepath combines drawdown and later-life annuities based on a client’s risk appetite.
According to the independent investment firm the offering gets past the traditional “either/or decision” between drawdown and an annuity.
It means retirement income comes from drawdown first and then from annuities when clients are age 70 -75.
Additionally, the proposition does not just consider one annuity but rather a “ladder” of annuities purchased in stages as the client ages.
Elston explained this means clients can capture better later-life annuity rates, as well as reducing the interest rate timing risk associated with a single annuity purchase.
Elston Consulting head of research Henry Cobbe said: “The mathematics of annuities means it pays to delay.”
The Annuity Glidepath framework can also integrate with retirement portfolios on any platform and gives advisers the flexibility to obtain quotes from any annuity provider, both on- and off-platform.
Elston’s Retirement Portfolios and Annuity Glidepath framework are available for licensing to DFMs and advisers.
Cobbe added: “By combining a retirement portfolio for drawdown first, with an Annuity Glidepath for guaranteed income later, advisers can a deliver a more holistic approach to retirement income, that considers clients’ behavioural risks too. A longer drawdown means greater flexibility and potential for growth. A later annuity means greater peace of mind and fewer complex decisions.
“Elston has been focused on retirement strategies since 2012 and first developed blended portfolio plus annuity solutions in 2015.
“The recovery in annuity rates and the ongoing FCA Thematic Review of Retirement Income Advice has reinvigorated debate on what good should look like when it comes to retirement income recommendations.”
The Annuity Project founder Billy Burrows also said: “Annuities should always be part of a retirement plan. They are the only effective hedge against longevity risk. Combining drawdown and annuities creates greater flexibility for clients and advisers alike. It is refreshing to see increased innovation in this space.”
