Investments, Retirement

Retirement income products too hard for some

retirement income products

Investment managers have not produced more retirement income products because some don’t have the capability or patience to do so.

Investment managers have shied away from producing retirement income stream products to date as many don’t have the capacity or patience to make them work, according to the head of Allianz Retire+.

Speaking with selfmanagedsuper, Allianz Retire+ chief executive Matthew Rady said investment managers often have the ability to produce retirement income products but many don’t because of a lack of experience or patience in dealing with long term outcomes.

“What we have seen is that a product provider has to be capable and there are some that are very capable but don’t have the experience in the retirement income space,” Rady said.

“We have also found that to work in this space requires incredible patience. The expectation of a return in three years has been the traditional business model which means there has been less need to be patient,” he said, adding that Allianz as an insurer is familiar with timeframes running from years into decades.

He said product providers also needed to expect they would gain scale in the retiree market and there was real potential in Australia with its growing retiree population.

Allianz Retire+ is a joint venture between insurance company Allianz and fixed income investment manager Pimco and launched its first retirement income product, Future Safe, in March 2019.

The product offers pre and early stage retirees access to a variable index annuity using either domestic or global equities with a variable level of risk, and the ability to reallocate the investment mix each year, combined with a fixed rate component.

Rady said the longevity of the parent firms of Allianz Retire+ meant the business started with a 20 year business plan, which was a demonstration of the commitment by Allianz to the retirement income, and initial reception from financial advisers and their retirement clients had been strong.

“The product is resonating with advisers because it demonstrates an effectiveness in reducing risk in retirement and they are using it as a core with cash and bonds for income.”

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