DB Transfer Solutions

DB transfers have a real attraction with inflated cash values currently available, driven by low interest rates. But the reality is that this fund has to provide an income for the rest of someone’s life. This can be very challenging if the fund loses significant value in the early years after taking the transfer value. It can damage the pension income for ever.

The FCA has expressed its concern that ‘some advisers fail to consider the actual investments that funds will be in post-transfer’. Maggie Craig, special adviser for the FCA separately said ‘advisers need to consider the specific scheme where the money is going.’

The Retirement Solutions Portfolio is an ideal solution for this scenario. The professors at Cass Business School have devised a methodology that helps protect investors from ‘sequence risk’ – the danger of investments spiralling down in a severe market downturn. It is a robust strategy that has been back-tested over 40 years. WM Capital has applied this methodology to both a DFM solution, which is available on a variety of platforms, and a fund.

The result is that the methodology captures, on average, 75% of upturns, but only 25% of downturns. The long-term difference is dramatic. Where a DB transfer is found to be in the client’s interest it can be the ideal investment both for this and other long-term investments in retirement.

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