Invesco has entered a strategic partnership with the retirement specialist Just Group with the launch of a new Retirement Investment Solution.
Bringing together Invesco’s model portfolio service (MPS) and Just Group’s Secure Lifetime Income (SLI) solution, the aim is to provide uncorrelated guaranteed income whilst lowering the dependence of withdrawing income from a growth portfolio through retirement.
The announcement comes in the wake of the recent FCA thematic review of retirement income advice and according to Kate Dwyer, head of UK distribution at Invesco, the solution fills a gap that has been “underserved by the market”.
“When we looked at the market there wasn’t enough choice, particularly for advisers to be able to work with their clients to give them good retirement income solutions,” said Dwyer. “We believe the asset management community, and the wider investment community, has a responsibility to get more products, services and solutions to the market to ultimately help end customers get better outcomes in retirement.”
The retirement solution, which will go live in the coming months, has been designed to sit within existing pension drawdown arrangements (Sipp wrapper), to help advisers mitigate key retirement risks, such as longevity, sequencing risk and unknown life events.
“We wanted to take the best of what Invesco has, particularly around our asset management and MPS solutions, and the best of what Just Group has to offer with its secure lifetime income solution and combine them to sit alongside each other inside a Sipp wrapper,” Dwyer added.
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Each model will be an open-architecture, multi-asset portfolio, made up of about 15-25 individual funds, with the adviser then selecting the model best suited to the individual’s requirements based on their needs and risk tolerance.
Kavi Myladoor, retail retirement income director at Just Group, said combining a guaranteed income producing asset with growth model portfolios has been shown to increase the probability of delivering higher long-term portfolio value, higher income and a more sustainable plan.
“When the FCA conducted its thematic review into retirement income advice, it opened the bonnet, looked beneath it and recognised advisers needed to consider wider solutions,” said Myladoor. “Part of this is how factors like guaranteed income and investment portfolios can come together.
“It’s not as simple as just putting two things tother, it has to consider individual customer needs and objectives and I think this is really the innovative aspect of this proposition. It has taken 12-18 months of hard work into thinking about individual customer circumstances and not shoehorning into one solution that the market generally operates on.”
In choosing to partner with Invesco, Myladoor praised the asset manager’s “strong foothold” in the adviser community and distribution market.
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“We also wanted to work with an organisation that has a strong cultural and strategic fit in terms of wanting to help customers at retirement,” she said. “From day one of working together we knew we were going to create something powerful.”
“Just Group has an undistracted focus on being a retirement specialist, while we have an undeniable focus on being an asset manager,” added Dwyer.
“The two propositions, currently only available separately, will work to give advised clints the option to have the guaranteed income of a secured lifetime product whilst getting the potential growth benefits of a model portfolio, with the flexibility to reinvest the income they don’t immediately need.”
