Case study: Imminent retirement Mrs BrownHelping your clients take a flexible income from their investmentsFor professional advisers only

Mrs BrownThe following case study is for illustrative purposes only.

58 year old married female

£780,000 pension assets

Up to £20,000 every three years for new car

Holidays on hold

Adviser has carried out suitability and deemed decumulation suitable

£32,500 annual income requirement, plus 3% inflation assumption

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Client strategy discussion

Mrs Brown, 58 years old, has recently received a defined benefit transfer with £780,000 in pension assets.

Having carried out a detailed expenses assessment to include some headroom for additional discretionary spend, the adviser ascertained her income requirements to be £32,500.

To contend with potential future inflationary pressure, the adviser also asked for a 3% inflation assumption to be built in. As Mrs Brown likes to exchange her car every three years, Brooks Macdonald have also accounted for an additional spend of up to £20,000 for these particular years.

The Brooks Macdonald investment manager also discussed the matter of capital sustainability as, although initial withdrawal amounts were not overly challenging, compounding increases of 3% per annum would eventually lead to capital erosion

over the longer term. The adviser indicated that Mrs Brown will receive full state pension and although this is not yet within the time frame for consideration within the short term portfolio (within the next seven years) her income requirement from this investment will reduce in due course when the state pension age is reached.

Risk profile

The adviser’s risk profile analysis determined that Mrs Brown was a medium risk investor. Typically, the adviser would have suggested reducing risk given the proximity to retirement. However, having understood that the short term portfolio aims to mitigate sequencing risk in the short term, the adviser and client were comfortable maintaining a medium risk profile for the longer term.

The following case study is for illustrative purposes only.

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Portfolio compositionFollowing the adviser’s suitability assessment, and other discussions with the client, we structured Mrs Brown’s portfolio as illustrated below to ensure her shorter-term income requirements are met while still providing the opportunity for growth, in excess of inflation, within the longer-term portfolio.

Portfolio Short-term income requirements

Asset allocation of long-term portfolio

Short-term portfolio

Source: Brooks Macdonald, May 2021. For illustrative purposes only.

Long-term portfolio72.1% (£562,387)

Fixed interest18%

Structured products21.7% (£169,133)

Equity66%

Short-term cash6.2% (£48,480)

Alternatives11%

Property3%

Cash2%

Anticipated income needs

£10,000

£20,000

£30,000

£40,000

£50,000

£60,000

2022 2023 2024 2025 2026 2027

Investment required to create income

18%

66%

72.1%

11%

21.7%

3%

2%

6.2%

£0

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This document is intended for professional advisers only and should not be relied upon by any persons that do not have professional experience in matters relating to investments. Investors should be aware that the value of your investments and the income from them can go down as well as up and that neither is guaranteed. Past performance is not a reliable indicator of future results. Investors may not get back the amount invested. Brooks Macdonald does not provide tax advice.

Please be aware that this service utilises structured products as part of the portfolio construction/strategy which comes with specific risks. Should the counterparty fail, you may not have access to the Financial Services Compensation Scheme (FSCS).Investors should speak to their advisers for further information and to ensure they understand the risk and return factors applicable in their case.

Brooks Macdonald is a trading name of Brooks Macdonald Group plc used by various companies in the Brooks Macdonald group of companies. Brooks Macdonald Group plc is registered in England No 4402058. Registered office: 21 Lombard Street London EC3V 9AH. Brooks Macdonald Asset Management Limited is authorised and regulated by the Financial Conduct Authority. Registered in England No 3417519. Company Registered Office: 21 Lombard Street, London, EC3V 9AH

Contact usFor more information, please get in touch with us at

E: info@brooksmacdonald.comT: 020 7499 6424W: brooksmacdonald.com

Important information

UK_Decumulation_SalesAid_CaseStudyMrsBrown_June2021