Hymans Roberston has created a new range of strategic asset allocations, designed to meet the regulatory requirement of the new retirement investment pathways.
The Financial Conduct Authority has stipulated that those opting for drawdown without advice should be offered four distinct pathways, depending on their needs. Implementation of this new retirement regime has been delayed though due to the Covid crisis.
Hymans Robertson said these strategic asset allocations (SAAs) will allow providers to offer investment strategies that meet these new requirements, and help ensure consumers are invested in a way that meets their needs.
The bespoke asset allocations have been designed to meet the specific objectives of each of the four pathways be can also be customised by providers to reflect their business and the profile of their customers.
Hymans Robertson head of strategic digital solutions Paul Waters says: “Implementing the FCA’s mandatory Investment Pathways is a big task facing providers. These SAAs will provide a great foundation as off the shelf investment strategies with clearly defined risk profiles that can deliver good outcomes for customers.”
He says these asset allocations have been devised with an understanding of the potential customer objectives for each pathway, using a combination of quant modelling and investment market insight to develop and test the SAA.
Waters adds: “Each of the SAAs provides a balance of growth and defensive assets, avoiding illiquid or esoteric asset classes on the whole, to make the investment process more straightforward while at the same time providing a balance of growth and protection for customers.
“These SAAs not only help providers with the implementation but give them reassurance that they are meeting the compliance requirements set out by the FCA.”
Hymans Robertson says that once the SAAs are set it monitors the market environment and runs forward looking projections each quarter via its proprietary stochastic model. Waters says: “We can then provide reporting which feeds into the provider’s governance body, and if necessary, make adjustments to the SAAs to ensure they continue to meet the objectives.”
He adds: “There are a large number of customers with medium sized pots who are approaching retirement and for whom financial advice is unaffordable or impractical.
“Investment Pathways offers a simple and low cost way for these customers to access an investment solution broadly suited for their retirement. Coupled with clear and straightforward communication it has an important place to play in the market for a customer segment who are too often left high and dry.”
The Strategic Asset Allocations are already developed and can be implemented straight away.