There is potential in the U.K. retirement sector for an industry player to provide effective insight into how best to approach decumulation, according to Nicola Morgan-Brownsell, head of multiasset partnership strategies at asset manager LGIM.
Morgan-Brownsell, speaking on a panel discussion during an event hosted by trade body the Investment Association, also stressed a need for individual retirement plan participants in the U.K. to receive better and more comprehensive financial advice.
"There are gaps there for somebody to come in and offer a really comprehensive retirement income or decumulation proposition. There's a lot of forces for interesting change,” said Morgan-Brownsell at the panel.
“The questions that industry needs to answer are what does that product proposition look like to be able to take us from the accumulation phase into retirement income and decumulation, exactly how much needs to be passed on or drawn down, and how we help customers who traditionally haven't had experienced advice."
Morgan-Brownsell also discussed how artificial intelligence could lead to “democratization” of financial planning, giving a broader level of access to retirement savers than previously experienced in the U.K.
Robert Gardner, CEO of natural capital-focused asset manager Rebalance Earth and co-founder of pension consultancy Redington, was also on the panel and identified a potential need for radical changes in how plans approach shifting investment strategy as participants approached retirement.
"Volatility is your friend when you're investing, but when you're in retirement, it's quite a scary thing,” Gardner said.
“There's also a tension in that people are living longer, which means you probably need to be taking more risk for longer. This idea that you derisk the bonds when you retire probably isn't going to give you enough return to give you the inflation protection that you need," he added.
