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Investments, Retirement

Allianz Retire+ adds retirement portfolio tool

Allianz Retire+ retirement income

Allianz Retire+ has added a portfolio modelling tool to its retirement income product to predict a range of outcomes for those invested in it.

Allianz Retire+ has expanded the ways in which financial advisers can use its retirement income product by adding modelling that shows how it can be used with other investments to increase the certainty of outcomes.

The company announced it had formed a new partnership with goals-based advice technology firm Investfit to offer advisers a portfolio construction tool to use with Allianz Retire+’s Future Safe retirement income product.

Future Safe offers investors access to a variable index annuity using equities with a variable level of risk and the ability to reallocate the investment mix each year, combined with a fixed-rate component.

The new tool will allow advisers and investors to see how Future Safe can be used alongside other investments to generate possible returns for different levels of short-term risk.

According to Allianz Retire+, the tool can model portfolio simulations using inputs such as age, asset allocation, legacy and life expectancy with a set level of confidence that the portfolio will meet that outcome, with the default set at 90 per cent confidence.

The tool can also test outcomes at 95 per cent, 75 per cent and 50 per cent confidence that individual retirement goals will be met, with Allianz Retire+ noting the outcomes are still only an estimate as any financial projections used by the tool are based on historical data and not indicative of the future.

“However, unlike traditional portfolio construction methods, Investfit leverages sophisticated technology to allow for variances in investment returns from year to year and takes into the account the fact it is not unusual to have a sequence of poor returns over a number of years,” the firm said.

“Investfit projects these variations and also takes into account the correlations between interest rates, inflation, property prices and share prices — that is, the tendency for them to move together or in opposite directions.”

Allianz Retire+ head of product and customer experience Jacqui Lennon said the fear of running out of money was a key concern for retirees and was the main risk the portfolio tool sought to manage.

“Traditional advice is often modelled against expected average investment returns, which offer about a 50 per cent chance of achieving the projected retirement outcomes. That’s one in two clients that will have an outcome worse than what was presented,” Lennon said.

“This tool is completely unique in its ability to offer advisers an extremely accessible way to give retirees greater peace of mind, while improving adviser efficiency in producing almost instantaneous results for hundreds of portfolios,” she said, adding the tool allows advisers to model large numbers of possible strategies, rather than just those selected by default or based on a risk questionnaire.

“Our Future Safe Investfit illustrations show modelled projections across over 1000 scenarios, including selected income drawdown rates at a chosen level of confidence. This then arms advisers with projected data to demonstrate the impact of adding Future Safe into retirement portfolios to assist with mitigating sequencing risk, meaning retirees have higher confidence that they won’t run out of money.”

Allianz Retire+ is a joint venture between international insurance provider Allianz and global investment expert PIMCO, and Future Safe, which was launched in March 2019, is the first product released to market under the partnership.

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