October 2016
AFTER MONEY IN, COMES MONEY OUT
Last year, we took a look at the decumulation withdrawal landscape in our paper When The Levee Breaks. That covered standard-issue drawdown contracts in some depth (and is still worth a read, by the way).
But it didn’t cover annuities and it didn’t cover ‘guaranteed drawdown’ type products those uncomfortable bedfellows which are neither one thing nor the other but say they try to give the best of both.
This has been niggling at us for a while. We reckoned there was no point diving into annuities, because the mighty Ned Cazalet has done it better than we ever could. But these other products, largely unloved by advisers, felt like they were worth a look.
So we were pretty happy when the cats at Aegon shouted us to see if we’d be up for looking at the landscape across annuities, ‘naked’ drawdown (saucy) and what they call guaranteed drawdown.
We were, and the result is this fine paper: HOW TO GET YOUR MONEY BACK. In it you’ll find a dissection of the guaranteed drawdown market ‘which is a small one, but a market nonetheless’ alongside ‘normal’ drawdown and annuities. Here’s what you get:
- Retrospective and prospective scenarios of up to 30 years (because we like to party)!
- An attempt to work out if the reflexive adviser reaction of ‘meh, expensive’ is justified!
- The economic scenarios in which the various types of products perform best!
- Total actual cash money return across all the product types!
- A dramatic schematic infographic!
- A coining of the phrase death wager ‘quotient’ to replace ‘annuity rate’!
- New cat pictures!
THE PRICE OF ENTRY IS ZERO POONDS
Now, this paper is a free one because Aegon kindly covered the costs of us doing it. So thanks to them. Clearly they have a product to sell, and we cover it in this paper. But they were very well behaved throughout and didn’t get too huffy when we weren’t entirely complimentary about their offering in every respect. So what you read here is what we’d say if we weren’t being paid. You can believe that or not, but as ever when we do sponsored pieces, it is the truth. If you don’t like it, don’t read it.
