Periods of market volatility, particularly downturns naturally lead to concern, and this is especially true for clients approaching retirement. After years, often decades, of diligently saving and investing, it can be unsettling to see the value of one’s retirement fund fluctuate just as work winds down and reliance on those funds approaches.

One of our core responsibilities as financial planners is to support clients through these turbulent times, reaffirming the importance of long-term planning and helping to avoid reactive decisions that could undermine their financial goals.

From our first meeting with a client, and throughout regular reviews, we talk openly about the realities of investing: markets rise and fall. This is part of the distinction between investing and saving. While short-term volatility can be uncomfortable, we work to ensure it is understood that this is also expected.

We also highlight the importance of diversification – spreading investments across multiple asset classes to reduce reliance on any one area of the market. By reinforcing these principles, we provide clients with the confidence to stay invested and avoid impulsive moves, such as switching entirely to cash or significantly changing their asset mix at inopportune moments.

Tailoring Advice Across Life Stages

For clients approaching or in retirement, we conduct more detailed reviews to ensure their plans remain suitable. This often involves adjusting portfolios to include a higher proportion of conservative assets, such as short-dated fixed-income instruments or cash – providing greater stability and more predictable income streams.

We also recommend maintaining a cash reserve for short-term needs, helping to reduce the risk of withdrawing from investments during downturns.

Recent market cycles, such as those seen in 2022 and 2023, showed that traditional defensive assets like gilts can also experience negative returns during periods of rising interest rates. In such environments, we tend to favour ultra short-dated fixed income or money market instruments for their relative resilience and liquidity.

For clients still some distance from retirement, our advice remains focused on long-term growth. Regular contributions, diversification, and staying invested during downturns can enhance returns over time. Market dips can often provide opportunities to invest in quality assets at more attractive valuations, benefiting those with a long investment horizon.

Additional Considerations in Retirement Planning

A common strategy for clients in retirement is the use of a “multi-pot” approach – segmenting funds into short, medium, and long-term pots to meet needs across different timeframes. This helps provide clarity around which investments are intended for immediate income versus future growth.

We also discuss phased retirement options, which can smooth the transition into full retirement and reduce the pressure on investments in the early years.

Annuities, while less popular during the years of historically low rates, are now being reconsidered, by both clients and planners due to the recent rise in annuity rates. For many, guaranteed income from annuities, alongside the State Pension or any defined benefit pensions, can provide peace of mind by covering essential expenses. This, in turn, allows greater flexibility with invested funds used for lifestyle and discretionary spending.

Maintaining Confidence Through Education and Planning

A key part of our role is helping clients remain informed and emotionally resilient during times of uncertainty. Tools like cashflow modelling are invaluable in this regard, offering a clear picture of how different market scenarios, including downturns, might affect long-term outcomes.

This forward-looking approach provides clients with the required assurance that their financial plans are built to weather market volatility.

While short-term fluctuations are an inevitable part of investing, our focus remains on helping clients stay aligned with their long-term goals – providing education, structured advice, and emotional support along the way.

 

To discuss your own personal circumstances with a member of our Oxford team, or a member of one of our other regional teams, contact us on 0330 320 9280, email info@cravenstreetwealth.com or complete our online enquiry form.

The content of this article is for information only and does not constitute formal financial advice. This material is for general information only and does not constitute investment, tax, legal or other forms of advice. You should not rely on this information to make, or refrain from making any decisions. Always obtain independent, professional advice for your own particular situation. Craven Street Financial Planning Limited is authorised and regulated by the Financial Conduct Authority (FCA).