Which Drawdown plan
Drawdown is complicated enough as there are so many options on how you can set them up. Invariably a drawdown is set up with the help of an adviser, if you are going it alone I question your sanity. The question is who do you choose, which is the best drawdown provider?
I have written a few blogs on the subject of drawdown but choosing the most suitable provider is a question of weighing up costs and returns. Clients are very focused on getting the best deal and rightly so. At the start of this process you may have been looking at the best annuity rates, you may have quotes from all the top providers showing you who will pay the most annuity income. Are some of these quotes from non-advised annuity brokers, like Key, Age Partnership, Hargreaves Lansdown? If you were going for an annuity you would pick the most income and rightly so. Does the most income relate to the cheapest cost, lowest fee?
Do you think that the cheapest drawdown product is the best drawdown product? Without issuing advice I can tell you that Scottish Life are one of the cheapest drawdown providers, (see the article here for a more detailed comparison) Scottish Widows, Aegon, Aviva are not far behind but who offers the best returns? Double digit returns from pension companies has not been uncommon over the last year due to the growth in the stock market, so that fund that achieved 22% last year, what will it do this year.
Where to invest?
This is a very hard question and how I like to position this concept with clients is what can they afford to loose, what is their capacity for loss? When you are taking money from a pension plan you want to make sure its not going to go down as its a lot harder to make this money up. So the first thing is to keep hold of your life savings and make sure they do not start to go down. With this view we are looking at a more conservative approach and therefore returns are not going to be as high.
At Retire Right (Arthur Browns) We also use a wealth platform which allows us to invest in be-spoke discretionary funds, such as Cazenove, Close Brothers, SEI, Goldman Sachs. We are dealing with the best of the best here and these funds offer good returns with a less than volatile or aggressive investment strategy.
Every client is different but the key to the right drawdown product is the investment behind it and the advice running it, matching all of these with regular reviews is the most that can be done to make sure the plan does the right thing for the client.
Real life examples
Please have a look here and here at these detailed examples of clients real life drawdown plans over the last couple of years, it gives you real figures and shows you how they have done and goes through how advice has changed over the review periods. These are some of our current clients.