Put a well-heeled American fund manager together with an innovative UK insurer and you’d hope to come up with something imaginative. You would have hoped wrong.Here is another solution for the solution sodden advisory market that suggests innovation but delivers nothing but the same old- same old.

Invesco said the combination of these products provided a “differentiated retirement solution”, offering advisers access to a robust and flexible new proposition aimed to meet the needs of modern-day retirees.

Invesco head of UK distribution Kate Dwyer said: “With more of us set to live longer and spend more time in retirement, people need access to more innovative retirement solutions.

More and more of us are wanting to turn our workplace saved pots to post workplace pensions but modern-day retirees are not looking for a “differentiated retirement solution”. They want what it said on the packet – a pension from their  work.

Two’s company , three’s a crowd

We want a pension and most of us do not need an adviser to tell us how to get one, we need one from our workplace pension plan- as promised by Government and pension company. There is nothing modern about retirement, nor modern-day retirees, we have the same needs as previous generations of retirees, we need a replacement income as we wind down from work. But Invesco tell us that..

“Modern-day retirees need greater flexibility and options to ensure their savings are working as hard as possible for them. We believe Invesco can play an important role in driving innovation and supporting advisers when it comes to managing the risks to their clients’ income during decumulation.”

Supporting advisors? (my bold)

There is a substantial part of the wealth management industry who cannot see over the garden wall and beyond the safe confines of the advisory perimeter. They think of the advised world as the real world.

This is wishful thinking.

The vast majority of people do not take financial advice when deciding how to spend their money. For most of their lives they go to work, get paid and agree to have a percentage of their wages docked to get them a pension.

At no point in that process is there mention of needing an adviser.

As for the management of the “risks to their income“, that is what the pension does, supplying a wage for life “solution” with the income lasting as long as they do. It really would be innovative if Just and Invesco were to magic hundreds of thousands of advisers to manage our incomes and even more innovative if they can find a means of paying them without depleting the retirement income beyond repair.

The truth is that 1+1 ≠ 3 and as Jean Paul Sartre pointed out  “hell is three people”.

(Kate) Dwyer continued:

“The two propositions, currently only available separately, will work together to give advised clients the option to have the guaranteed income of a secured lifetime product whilst getting the potential growth benefits of a model portfolio, with the flexibility to reinvest the income they don’t immediately need. Our partnership aims to create better outcomes for people at retirement.”

This too is wishful thinking, while at some point the saver moves from an investment solution to an annuity solution, the timing of that decision remains with the individual, who may or may not have an adviser around at the time. It is a gross abdication of responsibility to assume that this later life decision will be taken to the satisfaction of the person in retirement. An automated solution is more required, the longer the decision to annuitize is delayed.

In the meantime, the flexibility of the drawdown from the Invesco managed pot leaves the saver with a monthly conversation with him/her self about how much to draw with all the risk of regret, when that decision goes wrong. This may work for the top 10% of the population for whom income is no object, but for the vast bulk of retirement savers, the drawdown/annuity manually advised model is neither innovative or time and cost effective. It is just another way to extract maximum rent from the hapless saver.

It is doing nothing to de-risk that cannot be achieved by financial advisers today and takes the saver no closer to getting a pension when they stop working. Very few people stop working when they get their state pension, drawing their private pension is typically their first step to stopping work , for most people it is a means to partial retirement. Yet we are still treating retirement as something you need an adviser to take – we are still creating products that need an adviser to manage and we are still assuming a lifelong relationship between adviser and client, so that the annuity conversion is kept under constant review.

Just Group retail retirement income director Kavi Myladoor added:

“The suitability of investment portfolios to support clients who are spenders, rather than savers, is in focus and under scrutiny by the conduct regulator. The needs of these clients and the investment risks they face are very different when taking an income and continuing to invest for growth. They need retirement focused investment solutions.”

By implication, the Financial Conduct Authority is now the pension regulator for those who have pots but no pensions. But this is not what pension freedom was supposed to be about. The advice guarantee was quickly watered down to the “guidance guarantee” but all but a minority of people don’t even take the free guidance on offer through Pension Wise.  People love the idea of pension freedom till they stare down the gun of the investment pathways.

So what are we left with? Back to Kate Dwyer

 “Combining a guaranteed income producing asset such as that delivered by our secure lifetime income solution with growth model portfolios, within the SIPP drawdown wrapper, has been shown to increase the probability of delivering higher long-term portfolio value, higher income and a more sustainable plan”.

Try explaining this to anyone but a financial adviser.