Using buckets for Retirement Portfolios help mitigate sequencing risk

Shrinking a pot is different to growing a pot. And shrinking it in downmarkets can be dangerous without guardrails.  This is why we designed a “Managed Buckets” based approach for Retirement Portfolios.

Using a retirement bucket strategy to create a retirement portfolio allocation

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When we launched decumulation portfolios for financial advisers' Retirement Income Advice proposition in March 2021, we used asset allocation concepts that were well established from our own work 1) in the institutional pensions market 2012-15, 2) suitability processes that were similar in scope to the newly minted Retirement Pathways for d2c providers in 2018, and 3) what is tried and tested in other large markets (e.g. US and Canada).

We fused this thinking into a "managed bucket" based approach that improves (from a process perspective, and potentially from an asset allocation perspective) on what many advisers do themselves already - but with 1) more consistency for clients, 2) more time saved for advisers, and 3) aligned to key findings of FCA TR24/1 which had long been on radar as "ASR2."

Since launch, this "managed buckets" based approach have experienced some interesting shocks - war, inflation and now Trump's tariff war. Interesting in times.

So for advisers who use the Elston Retirement portfolios for their clients in decumulation, we like to think that neither the advisers we work with, or their clients, are screaming at the telly or stressing about the markets. Because we have done our best to mitigate sequencing risk thru the design principles of the solution (rebalancing across now/soon/later) buckets.
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How investments are managed is one aspect. But good retirement plans also need valuable retirement income advice to ensure clients take out what they need such they you don't run out of money. That requires a good advice process (CRP) and a robust cashflow plan.
If you are a UK adviser and would like to find out more about the Elston Retirement Portfolios that we designed back in 2021 and how they're faring now - please contact us to arrange a consultation.