Dear Asset Manager…

Dear asset manager

I’ve been noticing how much you’ve wanted to manage DC assets so I thought you might like to have a chat about strategy.

I think you’ve been looking at your marketing strategy through the wrong lens or as your customers would say “arse about tip”

You manage assets but you’ve wanted to manage contributions. Contributions arrive in £per month while assets are calculated in their m or bn $$$!

“Where are the assets to be found?” At the end of the savings journey my friend- at retirement!

Now you may have noticed that with all the shenanigans going on at BOE, the cost of gilts is currently so high that no sensible person would voluntarily buy an annuity. Unfortunately we have a system of compulsory annuities in this country which means that many of my friends are being forced to invest in these damned guaranteed annuities. They are not happy now but they’re going to be a whole lot angrier when inflation smashes them (they can’t afford linked annuities).

They’d like to stay invested in real assets and buy an annuity later, which is where I’d like your help (and like to help).

If I could show you a way of managing all those at retirement assets for ten years plus with little or no competition from other asset managers, would you be interested in talking with me?

Thought so!

Well here’s how it works. I want you to devise a stable income producing portfolio of bonds and equities and alternatives that can give me a 3-4% yield and some inflation protection on the capital side. I don’t want a structured product, just an honest portfolio of your ETFs or pooled passive funds which you manage for income and growth- within your ken?

Thought so!

Now if you can provide me with a reasonably efficient cap and collar mechanism so I have a little downside protection , I’d be happy to have a look at it, but this is a nice to have.

Oh and I’d like you to offer this with a regular withdraw facility and a little bit of scrutiny to make sure the capital is preserved (I’m sure you’ve got some people who like looking at the algorythms for this kind of thing). You do?

Thought so!

Only one other thing, once you’ve got this little lovely together, I’m going to ask you to be very brave, so that when the nasty men in white coats come from the insurance factory and try to lock you up for eroding their big fat annuity margins, you tell them where to go. And when that nasty man with the bowler hat from Caxton Street comes asking you for capital guarantees, you tell him where to go. And when the marketing men from the financial advisory community demand that you don’t offer this for asset balances of below £100k , you tell them where to go.

Because I’m thinking that the only reason we don’t have collective drawdown products that allow people with small pots to stay invested in real assets till they can afford to annuitize, is because the men in white coats and bowler hats and sharp suits would rather stick needles in their eyes than let you at these big fat decumulation pots.

Now if I am being very naïve and am defaming the men in white coats, bowler hats and sharp suits, I’m happy to be sat on the cyber naughty-step.

But I’ve got a cocky eye for some of this collective drawdown stuff and have been sitting outside the door of Alliance Bernstein’s offices for a couple of years now.

So if you’ve got a couple of minutes, how about it? I ‘m keen as mustard to get me and my mates some comfort at retirement.

 And if I’m as mad as a box of frogs please tell me. I’ve put some comment down at the bottom and perhaps you can tell me why!

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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