More Related Content Similar to Dynamic Planner Training Academy - 12 September Exeter (20) Dynamic Planner Training Academy - 12 September Exeter3. ©2019 Distribution Technology Ltd. All Rights Reserved.
Agenda
09:00 – 09:30 Breakfast, registration and networking
09:30 – 09:40 Introduction and welcome
09:40 – 10:10 Dynamic Planner Client Success (live demo) – Client Case Study, a ‘how to’ session
10:10 – 10:40 Dynamic Planner Asset & Risk Modelling – The Importance of Fund Risk Profiling
10:40 – 11:00 Refreshments and networking
11:00 – 11:20
Dynamic Planner Client Success (live demo) – Client Review Process Update, what is new
and what’s coming up in ‘Elements’
11:20 – 11:50 Partner session 1
11:50 – 12:20
Dynamic Planner Client Success – ‘Let me show you how’, common questions asked by our
clients
12:20 – 12:40 Partner session 2 - Global economic update
12:40 Lunch and networking – A chance to ask questions one-on-one
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Learning objectives
Client Profile
Name: Andrew Green
DOB: 10/02/1970 (50 next birthday)
Retirement Portfolio: Circa £450k in Scottish Widows Personal Pension Plan.
Objective: retire at 60 and enjoy flexibility under drawdown
Learning Objective
To be able to understand the required information and steps needed to create a
Retirement Wealth Plan for Andrew.
Demonstrate how to perform the following in order to meet Andrew’s objectives:
→ Pension Transfer
→ Rebalance portfolio
→ Annual review (Session 2)
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Dynamic Planner –
The Importance of Fund Risk Profiling
Jim Henning, Head of Investment Services
Jason Dewar, Head of Fund Research
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Learning outcomes
→ Dynamic Planner Asset & Risk Model
Philosophy
→ Foundations of the Fund Risk
Profiling service
→ Centralised retirement process risk
mitigation strategies
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Why is forward-looking fund risk profiling important?
→ Last 20 years have seen volatility for higher yield debt and equity fall considerably
→ Now similar levels to UK gilts
→ Interest rate normalisation and end of benign markets ahead?
Source Lipper – Rolling 3 year period volatility
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Why is forward-looking fund risk profiling important?
Volatility compression continues, but spikey Interest rate normalisation ahead?
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Why is forward-looking fund risk profiling important?
Global financial system going back on Methadone Bond yields at historic lows → duration risk higher
-2
0
2
4
6
8
10
12
%Yield
Govt Bond 10 Year Yields
10YR UK Govt 10YR US Govt 10Y Bunds
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Dynamic Planner Fund Risk Profiling
→ Not based on past performance
→ Not based on sector asset ranges where divergence of outcomes can be wide
→ Not based on an arbitrary equity index relative scoring
0
20
40
60
80
100
120
140
1 2 3 4
Frequency
SRRI score
Mixed Investment 40-85% Shares
0
2
4
6
8
10
12
annualisedvolatility%
Annualised Volatility - last 5 years
Dynamic Planner Approach
→ Risk-adjusted benchmark ex-ante analysis → Client centric
Source Lipper/Dynamic Planner
max
max
min
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Dynamic Planner Asset Allocation philosophy
Ensures ongoing investment suitability by translating these characteristics
to the needs, objectives, situation and risk profile of the client
Equity Risk, Interest Rate Risk,
Currency Risk, Basis Risk
Holding Period Risk, Credit Risk,
Liquidity Risk, Concentration Risk,
Counterparty Risk
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Robust basis for Fund Risk Profiling – Quarterly oversight
Asset Allocation Comparison to Dynamic Planner
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
0.0% 2.1% 4.2% 6.3% 8.4% 10.5% 12.6% 14.7% 16.8% 18.9% 21.0%
Expectedrealreturn(%pa)
Expected volatility (% pa)
DT profiles
Multi Asset Growth I
Multi Asset Growth II
Multi Asset Growth III
Multi Asset Growth IV
Forward looking analysis
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Robust basis for Fund Risk Profiling – Quarterly oversight
The historical volatility
‘journey’ relative to the
Dynamic Planner asset
allocation
Measured by tracking
error analysis
Helps to understand the level of
risk being taking
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Quarterly time series
Fund Volatility Risk Profile 4 Risk Profile 5 Risk Profile 6
Rear view ‘sense check’
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Dynamic Planner Fund Risk Profiling services
Risk Target ManagedRisk Profiled
→ Portfolios managed in line with
Dynamic Planner model assumptions
→ Additional investment
consultancy from Dynamic Planner
→ Dynamic Planner Risk Profile
may change
627 FRP’d funds + 617 DFM portfolios 72 RTM funds + 38 DFM portfolios
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‘Cruise’
Active
‘Coronation St’
Sedentary
‘Care home’
Dependent
Day to day needs: Housing, Food, Heating
Regular discretionary:
Meals out
Leisure
One-off discretionary:
Holiday
Care costs
Needs in retirement
→ Average size of pension pot going into drawdown is £123,000*
→ Joseph Rowntree Foundation says a retired couple need a minimum of £13,500 pa
→ Yet clients will need to spend additional money at key life stages
Applying Fund Risk Profiling to a Centralised Retirement Proposition
£
Care costs
Drawdown from capital
inevitable for most
*Source FCA data bulletin – Sept 2018
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→ Rate variability
→ Capital &
income erosion
→ Increasing life
expectancy
→ Long-term care
funding
→ Income
variability
→ Capital
uncertainty
→ Fixed
withdrawals
→ Pound cost
ravaging Sequencing
Risk
Investment Risk
Inflation RiskLongevity Risk
Drawdown risk cycle – Four key segments
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Applying Fund Risk Profiling to a Centralised Retirement Proposition
The problem for natural yield investors
→ What level of risk am I taking to generate attractive income?
→ What is the expected level of risk?
→ How consistent is the income stream and capital variability?
→ Which peer group analysis is relevant?
The Solution
Income Focus Research Reports –
for Multi Asset funds
Premium / Select Research –
for Single Sector & Multi Asset funds
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Premium and Select Research ratings
Sector Peer group
Single Sector Funds IA sector classifications
Multi-Asset Fund DP’s 1-10 Risk Benchmarks
Risk Targeted Funds Relative to the RTM fund families
The rating considers a fund’s consistency (or fit) against the Dynamic
Planner asset and risk model and its efficiency in delivering returns.
A uniform scoring matrix and ranked within a relevant peer group.
5 years 3 years
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Sequence of returns – An actual example
Example: popular MA fund
Dynamic Planner Risk Profiled 4
Over seven years £10,000 made
total return of £16,348 (7.3% pa)
This risk has been unnoticed because of benign
markets (blue line)… but the risk hasn’t gone away
If: Fixed £ monthly withdrawal of
£41.67 pcm (so 5% of original pa)
The outcome can vary by 53%
depending on monthly sequence
of returns
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The impact of volatility drag
1%
5% 11%
25%
43%
67%
100%
150%
233%
-1% -5%
-10% -20%
-30%
-40%
-50%
-60% -70%
-100%
-50%
0%
50%
100%
150%
200%
250%
Gain required to fully recover from a loss
Gain to recover
Amplification of
sequencing risk
when more
volatility occurs.
Loss
So reduce volatility
to mitigate the
sequencing risk
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Sequence risk mitigation via our Fund Risk Profiling services
The problem for decumulation investors:
“There has been little in the way of product innovation in retirement income products
since pension freedoms came into force.” FCA Sector Views, January 2019
The solution: A new asset and risk model service to asset managers
New asset allocation framework
Measures and monitors the risk of a fall in value on a monthly basis
Ensures the risk to the client’s capital remains the same over the annual client review period
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How effective Risk Managed solutions can be identified and profiled
Monthly Risk Control Required to be RMD
Fixed
Income
Property
Cash
Absolute
Return
Risk of short-term correlation with equities
Over exposure to inflation risk
Liquidity risk and risk of gating
Short-term downside protection
Ideally Market Neutral Hedge funds
More negatively correlated to equities in short-term
Less inflation risk
Mandates and objectives focused on short-term risk
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A new standard for decumulation solutions
Badges will be applied to the RMD solutions
from asset managers when joining the service
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Centralised Retirement Proposition – Challenges addressed
→ Rate variability
→ Capital &
income erosion
→ Increasing life
expectancy
→ Long-term care
→ Income
variability
→ Capital
uncertainty
→ Fixed
withdrawals
→ Pound cost
ravaging
Sequencing
Risk
Investment
Risk
Inflation Risk
Longevity
Risk
Asset & Risk
Model
Income Focus &
Research Reports
Asset &
Risk Model
in real terms
Cashflow
modelling
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What our clients say
“I don’t think there is anything else out there like this – it’s a new document for
a new process, which, because of MiFID II, advisers have to produce now,”
said Chris Miller, Miller Associates.
“Dynamic Planner is way ahead of the pack with this,”
said Nick Ryan, Yellow Bear Financial Consultancy.
“It’s the way forward for me as an independent adviser,”
said Dmitry Morgan, Morgan Financial. “It puts me in the same position as
large national firms, in terms of their very slick presentation and will definitely
save me time.”
“Elements produces an impressive report, which demonstrates to your clients
that as a firm you are professional and you know what you’re doing,”
said Gary King, GK Financial Solutions.
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Dynamic Planner Roadmap
Sept 2019 Oct / Nov / Dec 2019 Jan / Feb / Mar 2020 Apr / May / June 2020
Novia integration Cashflow trial
Suitability trial
RMD funds available in
software
Cashflow launch
Suitability launch
Cashflow
Suitability
Save The Date!
2020 Dynamic Planner Annual Conference
Manchester 28 Jan 2020
London 5 Feb 2020
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FAQs
Question 1. Risk Profile Client Invites – how to send and import data
Question 2. How to use research tools in Portfolio Suitability Hub
Question 3. How to find a risk score of funds that do not have a Dynamic Planner risk rating?
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Qu1 Risk Profile Client Invites – How to send and import
→ Secure link via email
→ Makes face-to-face time with clients more efficient
→ Additional cost on top of Dynamic Planner licence
→ 10 invites for £10 per month (excluding VAT)
→ 250 invites for £15 per month (excluding VAT)
→ Easy import of answers into the service
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Training & Consultancy
Training on Dynamic Planner and bespoke consultancy is available for our users.
You can:
1) Access nine on-demand training videos - from Risk Profiling to Retirement
Planning to Elements - at: www.dynamicplanner.com/training-videos
2) Have paid-for training in your office or at the Dynamic Planner offices in
Reading
For full details, contact Client Success on 0333 6000 500 or at
support@dynamicplanner.com – or contact your Account Manager directly
Editor's Notes Reference this is discussion the functionality of a full Dynamic Planner licence. Reference network/service provider may see things differently. CLO on Student loans issued by the UK Gov Elements is available at no extra cost to all licence holders who have a full Dynamic Planner licence. Depending on you access via a service or network provider you may not be able to access this functionality?