Fränzo Friedrich, head of marketing at Momentum Investments
For many people, the biggest financial decision they face when they retire is how best to use their accumulated retirement savings from approved retirement funds to provide them with a sustainable income in retirement.
Traditionally, the choice was between a life annuity and a living annuity, each with its own unique features and rules. Even if people decide to use some of their retirement savings to purchase a life annuity and some to invest in a living annuity, they may end up with two separate retirement income products that can make it difficult to manage their income during retirement.
There is a better way for financial advisers to help their clients plan and structure their finances when they retire to solve the need for certainty and flexibility.
Enhanced Retirement Income Option
We have enhanced our living annuity product, the Retirement Income Option on the Momentum Wealth platform, to help clients structure their retirement income plan better. They no longer have to choose between the certainty of a life annuity and the flexibility of a living annuity – clients can have the best of both in one retirement income solution.
This solution has numerous benefits to clients and their advisers.
This hybrid structure introduces richer advice opportunities for financial advisers. With traditional solutions, the relationship between the adviser and client in many cases reaches the end phase once the client chooses the life annuity. There is therefore a single point in time where advice is required.
Contrast this with a world where clients’ needs can be better met by blending a life annuity with a living annuity. In this structure the life annuity becomes one of many components that a client can choose from within a living annuity. Financial advisers can continue to be involved in advising clients during their retirement years – for example about how to manage expenses in the context of returns, when to protect income, and how much income to protect.
By allocating a portion of their retirement savings to a life annuity component within their living annuity, financial advisers can help their clients personalise their income plan by helping them decide:
- how much of their retirement savings they want to use to cover their essential ‘life expenses’; and
- how much they want to use for their more flexible ‘living expenses’.
This product enhancement will help financial advisers and their clients make more informed decisions about their retirement income planning. Clients can choose to allocate a portion of their retirement savings to the new Guaranteed Annuity Portfolio that will pay a guaranteed income for as long as they live. At the same time, they have the investment flexibility to benefit from potential growth from investment markets and the possibility to leave a legacy, all in one living annuity.
The Guaranteed Annuity Portfolio is a life annuity, which is available as an optional investment component to clients starting a new Retirement Income Option or who already have a Retirement Income Option.
The Power of balance
Equilibrium is a discretionary fund
manager that brings balance into
your financial advice practice.
We enable you to do what really matters – spending more time
with your clients and building your business.
Equilibrium Investment Management (Pty) Ltd (Equilibrium) (Reg.No.2007/018275/07) is an authorised financial services provider (FSP 32726) and part of Momentum Metropolitan Holdings Limited, rated B-BBEE level 1.
Investing is personal
We understand that a client’s investment is not just another investment – it’s something personal – and it helps them to achieve their financial goals on their life journey. When something is personal, it really matters. That is why with us, investing is personal.
By blending the best of both worlds – the income certainty of a life annuity and the investment flexibility of a living annuity – we are partnering with financial advisers to help clients:
- make better decisions about structuring and implementing suitable income solutions when they retire; and
- optimally manage their income during retirement to cater for changing income needs.
The best of two worlds
Our blended product solution gives people the best of two worlds: the flexibility of a living annuity that can give clients investment growth and the certainty of a life annuity that pays them a guaranteed income for life.
With our new Guaranteed Annuity Portfolio financial advisers can help their clients make the rest of their life, the best of their life.
It’s retirement reimagined.