• Stuart Fowler

Understanding the odds: valuing clarity from retirement outcomes

Thursday 23rd July Baltic Exchange, 28 St. Mary Axe, London EC3A 8BH 6.15pm for 6.30 start

In this seminar, we will ensure you:

  • see the true nature of the retirement funding goal as a management task calling for a solution

  • can judge better the solutions typically available to private clients

  • understand the potential benefits of our solution (in clarity and confidence along the way as well as better eventual outcomes)

The seminar will start at 6.30 and end, after a Q&A session, promptly at 7.30. There will then be an opportunity for further discussion over drinks.

The following summary of the scope of the seminar provides more information about what to expect, both as generic education and as ‘the sales pitch’ from No Monkey Business.

The retirement funding task Funding your own retirement spending can look like an awesome task for an individual, and even deeply unfair that you depend, unprotected, on huge economic uncertainty. But as a financial goal it can usually be described in a quite straightforward way. You probably want to maximise your real (after-inflation) spending power. You will want to do this subject to some constraints that may vary, person to person, such as:

  • not running out of money

  • meeting any other goals you have for your money (including both lifetime gifting and a bequest to your heirs)

  • being able to sustain your real spending through changing economic conditions

  • spreading your spending power unevenly over retirement to reflect time preferences (such as spending more when younger, fit and able)

When accumulating You are likely to have competing financial goals and can benefit from professional insights to prioritise and order these over different stages of your life.

For your retirement goal, the inputs you control are the resources assigned to the goal and the amount of risk you take. The two are intimately related by the rule of ‘no free lunch’. You have virtually no control over (or prescience about) changing economic conditions that affect investment outcomes. You do, however, have a lot of control over costs but probably do not know how to make choices about these or even what all the costs are.

These planning characteristics apply to a total sum of money, possibly in different accounts and with spouses as different legal owners, assigned to the goal of retirement spending. Only part is likely to be in pension accounts. Complex pension law and taxation (made no simpler by the Chancellor in his 2009 Budget) and equally complex maths mean you are unlikely unaided to make good decisions about the split between pension and non-pension accounts.

When retired At retirement, the accumulation game is over and resources are known. The key output you now need help with is the rate of drawdown from capital that maximises real spending, subject to the constraints that apply to you.

If you value assigning surplus capital to another goal, particularly if that goal is lifetime gifting, you will need a high level of confidence that the resources assigned to retirement spending really are right for the target outcomes and the amount of risk, so that you can derive an immediate benefit from meeting that other goal.

As the drawdown plan unfolds through actual, rather than predicted, market conditions, you will need help revising the rate of draw, unless you choose to assign ‘surplus’ capital to other goals. And at some stage you will need help determining whether your goal, subject to competition from a bequest motive, is best met by buying an annuity rather than continuing to draw down.

For the proportion of your retirement assets in pension accounts, those complex pension rules and complex maths mean there is lots of scope for mistakes in determining an optimal strategy for extracting value from the accumulated pension funds.

The solutions As a description of a management task, this is far easier said than done. To answer all the questions it begs, with realistic recognition of the uncertainty and limits of our knowledge, calls for some very sophisticated technical skills and tools.

Understanding of the decision context itself (which is the easiest for IFAs to assimilate but, without the other skills, is no guarantee of good decision making)

Realistic modelling of future investment real-return probabilities, specific both to current market conditions and to all the different horizons for the cash flows in drawdown (engineering which is almost totally lacking in retail investment practice)

Constant, dynamic management of the fully-customised asset-allocation strategy that has to deliver the acceptable planning outcomes (something which is desperately challenging for discretionary investment managers let alone IFAs)

Reliable techniques for risk management to ensure the current portfolio is always consistent with the agreed acceptable outcomes (the industry’s traditional reliance on asset-class diversification does not get this job done so we have to adopt other techniques, such as matching or hedging risks, as in ‘Liability Driven Investment’ in occupational pensions)

Really effective communication between client and adviser that can turn technical knowledge into intuitive and personally-relevant information and so support personal responsibility for key choices (rather than blind delegation to a professional).

The business model The best technical solutions also need the support of the right business model if complete information about a decision, and advice that maximises welfare, would otherwise conflict with the agenda of an adviser. We will explain the typical sources of conflict of interest that lead to worse outcomes for customers and show you how our distinctive approach to charging aligns our interest with our clients.

Read what clients say about our seminars and about the difference being a No Monkey Business client has made to their clarity and confidence when using risky capital markets to achieve some important or vital personal objectives.

To accept our invitation please contact Joseph Clark on 020 7736 2434 or email him at


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