More than half of advisers (52%) believe the thematic review of retirement income advice by the Financial Conduct Authority (FCA) should recommend a different investment approach for clients in decumulation compared to those in accumulation.

This is according to findings from a poll of advisers by Copia Capital Management.

More than two in five advisers (42%) believe the decision is not clear cut, while just 5% don’t think a different approach should be recommended.

The survey of 84 advisers formed part of a webinar by Copia with head of sales, Tony Hicks, and portfolio manager, Kevin Blackwell. Also on the webinar was business development director, Yannis Katsis, and SLI proposition manager, Stuart Slegg, both from Just Group.

Setting out Copia’s position, Hicks explained: “I think it's unlikely that the FCA’s thematic review will say anything other than your decumulation strategy should be purpose-built. We firmly believe that the risks in accumulation and decumulation are different.

“Accumulation is pretty straightforward, we’re trying to provide a real return and beat inflation, within the client's risk appetite. In decumulation though, we need to consider longevity and sequencing risk and clients want certainty of outcome.

“Over the last 18 months, we’ve seen the traditional approach of the 60/40 bond/equity portfolio fundamentally fail in decumulation due to the correlation of bonds and equities in falling markets. People have gone into retirement and seen their portfolio fall by perhaps 20%, which is really concerning as it will significantly alter their lifestyle in retirement.”

Outlining the benefits of using guaranteed income assets as part of a decumulation portfolio, Just Group’s Katsis added: “By using Just Group’s guaranteed income producing asset, delivered by our Secured Lifetime Income solution, it can sit inside the overall asset allocation framework, but importantly doesn't interfere with what the investment manager is doing.

“The guaranteed income is paid for the life of the client. The income won’t fluctuate and isn’t correlated to anything in the portfolio, so it frees up risk budget for the investment managers to use elsewhere. The regular income delivered through SLI can be used to subsidise withdrawals, dampen sequencing risk within the portfolio, and helps to mitigate longevity risk.

“If there’s surplus income, then some or all of it can be left in the cash account to help manage tax liabilities, retained for future use, or reallocated back into the portfolio, enhancing the client’s legacy pot.”

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