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Brooks Macdonald to launch pension decumulation service

Clients looking for a more defined income stream for their portfolios have been promised a 'genuinely innovative' product by April.

Brooks Macdonald to launch pension decumulation service

Brooks Macdonald is set to launch a decumulation service, aimed at clients who are looking for a more defined income stream from their investments.

Caroline Connellan (pictured), chief executive of Brooks Macdonald, said: ‘We are excited about the potential of our new decumulation product, aimed at people in the early years of retirement balancing a need for income with the need to continue exposure to growth.

‘We’ve had great feedback from advisers on the product, which we believe to be genuinely innovative. April is our current estimate of when we’ll be ready.’

Although details about the new service are scant, the company described product development as ‘complex’, including a review of how different approaches to portfolio construction responded to historic market data.

It is being rolled out to a small number of advisers, and discussions are under way to launch tailored versions of Brooks’ managed portfolio service.

The news follows the company’s interim results, covering the second half of 2018, which were broadly positive, despite a challenging fourth quarter.

Brooks Macdonald saw pre-tax profits rise by 8.1% to £9 million, thanks to ‘ongoing cost discipline’. Meanwhile, revenue rose 7.7% to £52 million, buoyed by an increase in fee income. In light of this, the company raised its interim dividend by 11.8% to 19p.

However, it wasn’t all good news: assets under management fell by 4.5% to £11.9 billion over the six-month period, which was attributed to investment performance. This was partially offset by £241 million in net new business.

The firm has laid out a three-pronged plan to cut costs.

‘We are done for now with staff costs and are now looking at non-staff costs. A review of our property portfolio has already started and will continue as leases renew over the next couple of years. We want to see if we are in the right place and at the right price point,’ group finance director Ben Thorpe said.

‘Secondly, there will be a rationalisation of our supply base to make sure we’re not paying for some services twice. Thirdly, we will have a new employee expenses system towards the end of the year to keep a better eye on cost,’ he added.

In January, Brooks Macdonald slashed 50 jobs, mainly across IT and administration. The firm expects to save £4 million from the redundancies, £1.5 million of which will come through in the second half of 2019. Restructuring costs totalled £3 million.

Connellan said: ‘It was regrettable that we had to lose a number of individuals but it was the right thing to strengthen the business.’  

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