Rebalancing Retirement: Supporting clients with confidence through change

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Retiring isn’t a single milestone anymore. Instead, it’s a period of transition, gradually unfolding as people reshape their working lives and reassess what financial security means for them. Before stepping away completely, clients may reduce hours or change the nature of their work. The process is highly individual and brings opportunity and uncertainty, so advisers must plan thoughtfully to support clients during a time when decisions carry long-term consequences. 

Guiding clients through the retirement risk zone 

This period usually spans the five to ten years before and after retirement – the retirement risk zone. It’s a time of major financial and emotional change, when many feel less comfortable with uncertainty. When they’re nearing, going through or emerging from the retirement transition, they might seek more reassurance about the future. Many clients dial down their risk appetite and look for more stability. Research shows a clear trend towards caution, with predictability outranking their desire for additional growth. 

Behavioural shifts in this vein are completely natural, but without guidance they can nudge decisions off course, potentially undermining long-term plans. Clients might hold excess cash, avoid growth assets or react to short-term market moves. Helping clients understand their instincts – and providing structure and reassurance – is a crucial role that advisers can play to help keep their plans on track. This includes steering the shift from building wealth to using it in a sustainable, confident way. 

Sequence of returns risk, and how to stay ahead of it 

The early years of retirement are particularly important because several risks interact at once. Clients may need their assets to last thirty years or more while at the same time facing the impact of sequence of returns risk. This occurs when negative market outcomes early in retirement combine with withdrawals and can significantly reduce the long-term value of a portfolio.¹ Managing this risk requires a thoughtful approach that balances security with the need for continued growth.  

Retirement income research highlights time segmentation as a commonly used approach to managing sequence of returns risk by aligning assets with anticipated spending timeframes.¹ 

• Immediate and short-term spending is supported by cash or short dated instruments 
• Medium term needs are met through assets such as intermediate fixed income 
• Longer term needs are invested in growth assets that replenish earlier parts of the plan over time 

This approach offers clients clarity and comfort. It helps them see how their income will be delivered year by year and it avoids the need to sell growth assets during periods of market weakness. It also creates a clear framework that advisers can use to explain decisions and support confidence at a time when emotions can strongly influence behaviour.¹ 

Alongside a time‑segmentation, smoothed funds can be used to help manage the effects of short‑term market volatility within a retirement income strategy. The Standard Life Smoothed Return Pension Fund uses an estimated growth rate that adjusts the value of units if the underlying asset prices move away from longer range expectations. The result is a steadier investment experience which can help clients remain invested through uncertain periods and avoid emotional reactions that could harm their long-term outlook.¹   

Because clients in the retirement risk zone are often seeking more stability smoothing can help them feel more supported and confident. It complements other retirement solutions by providing an experience that feels more predictable while still contributing to the long term growth needed to sustain income.¹  

How smoothed funds can help 

As clients explore their options advisers can find detailed guidance and resources through the Standard Life Adviser hub which offers comprehensive information on the Standard Life Smoothed Return Pension Fund, including how the smoothing approach works and how it can support a modern retirement plan.  

Find out more on our Smoothed Return Pension Fund page.  

Sources: 

¹ Retirement Researcher - Time Segmentation: A Practical Defense Against Sequence of Returns Risk