Trustnet Magazine Issue 21 September 2016 | Page 6

you must review this at least yearly ,” said McPhail . “ This is especially true in volatile markets .”
ROLLERCOASTER RIDE It may seem that we ’ ve had little but volatility in investment markets this century and recent months have seen property prices swing wildly , a weakening of sterling after the vote to leave the EU and there are concerns of a coming correction in emerging markets .
Robertson says the only answer is to build a diversified global portfolio with risk levels that are appropriate for the client .
“ If clients are looking to retire at 60 , they still have a 20- to 25- year investment horizon and even low inflation chips away at your money ,” he explained .
“ You need to take a bit of risk , but we aim to generate returns that provide income and protect the capital value as much as possible .”
He says this means being as openminded in considering investment vehicles and pension products alike . Open-ended funds are flexible , but investment trusts are also good for generating income . Robertson also believes good old-fashioned distribution bonds – or even withprofit bonds – may have a role to play , so you shouldn ’ t dismiss them out of hand .
Trusts also offer an effective way of transferring assets between

“ Thankfully we seem to be moving away from the British reserve that doesn ’ t involve the family in financial affairs ”

generations , meaning it would be unwise to avoid them because of higher costs .
There may even be some margin in rolling over income into ISAs in order to maximise your fund while minimising your tax liability as you approach retirement , though many people choose not to do this .
Robertson has found many of his clients don ’ t want to generate their retirement income from property . Some of them have gone down this route in the past , but have decided the role of landlord isn ’ t all it is cracked up to be .
McPhail says property can be a useful income provider , but only as part of a diversified portfolio . Buyto-let is becoming less popular as a result of changes to tax treatments . A rental property can be a good investment , but you should keep
some money in an ISA or pension in case of damage or void periods .
“ If you ’ re relying on an investment property to provide income in retirement , that would be dangerous ,” explained McPhail . “ Not only are you relying on one asset class , but a single asset . You could find yourself highly exposed if something goes wrong .”
WHO SHALL IT SERVE ? While many people save for their pension without giving any real consideration about how to access this money , they are even less likely to consider who it will need to provide for .
Independent financial planning consultant Lisanne Mealing says retirement should be reviewed far earlier , not only by the saver , but by their partner who will benefit from it . Mealing says they should begin this process as early as their 40s or 50s – usually as their children get older – so they can work out what lies ahead .
This approach could prevent a situation Mealing witnessed when she met the wife of a client who was approaching retirement .
“ There was a definite atmosphere of hate in the room ,” Mealing explained . “ This was because the wife knew there was a pot of money and wanted to convert part of their house for her parents , while the husband wanted to travel and do all
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