Every client in retirement has different needs and circumstances – typically, these include:

• Time horizon (age/health)
• Income needs
• Changing circumstances (income/care home)
• Longevity of the pot
• Legacy planning
• Gifting/lump sum withdrawal

And within this, there are subcategories.

So – we have a lot of possible client scenarios to handle. In order to ensure consistency in outcomes across client banks and advisers (within a firm) – circumstances can be distilled down into buckets. Aspen has created a three-bucket approach to cater for the wide range of client needs and circumstances. These three pots Aspen describes, as: Liquidity, Lifestyle and Longevity.

• Liquidity (typically lower risk) – Immediate cash needs/avoiding sequencing risk
• Lifestyle (typically medium risk) – Aligning the strategy with current and desired way of living
• Longevity (typically higher risk) – Sustainability of pot over the long term/for legacy

What you can then do is assign a risk or preferred portfolio to each of these buckets – then you can flex these, depending on the client circumstances.

At Aspen, the team recommend the following portfolios for each pot:

• Liquidity – Aspen Cash Plus portfolio
• Lifestyle – Aspen Four Seasons portfolio
• Longevity – Aspen Growth Passive Plus portfolio

Below is a simple case study:

Client circumstances

• Retired, with pension pot of £1,000,000. Aged 70 and in good health – expected investment time period of 20 years. Medium risk investor.

Client requirements

• Pension pot to provide £50,000 per annum (gross), growing with inflation. Avoid sequencing risk/significant volatility. Would like to leave some legacy to children.

Solution

• Liquidity: £100,000 in Aspen Cash Plus portfolio, providing liquidity and capital stability for the next two years, whilst still generating a return.
• Lifestyle: £200,000 in Aspen Four Seasons portfolio seeking to generate an inflation beating return, over the medium term, with relatively low volatility.
• Longevity: £700,000 in Aspen Growth Passive Plus portfolio, for longer term growth/legacy.

Here, you have created a custom solution for a client (at an all in cost of 0.38%), using the building blocks of model portfolios in a simple and consistent manner.