Presentation overview 

Buffers, buckets, and balancing: Building portfolios for retirement income withdrawals

Those giving retirement advice face a dual challenge: building resilient retirement income portfolios while managing clients’ very human concerns about market volatility and running out of money. In this session we’ll look at the use of cash buffers and “bucketing” strategies – popular but sometimes debated approaches to managing sequencing risk and providing client reassurance. By weighing the investment theory against behavioural benefits, we’ll consider how these approaches can allow advisers to provide robust outcomes and greater client confidence. We’ll finish by looking at the practical application of this approach: how to size buffers and buckets, what assets should be used in each bucket, and how to manage and rebalance them in response to changing market conditions and evolving client needs.

Learning outcomes

By the end of this presentation, you’ll be able to:

One.
Explain the advantages and disadvantages of using buffers and buckets from an investment and behavioural perspective.

Two.
Design a bucketed retirement strategy tailored to individual client circumstances.

Three.
Apply practical methods for rebalancing and replenishing buckets to ensure portfolios remain aligned to client objectives.