webinar
Living annuities: The risks, the myths, and potential solutions.
While the flexibility of living annuities make them so popular, it’s also that flexibility that introduces unique risks compared to other traditional forms of post-retirement products.
To digest this information, host Leigh Kohler, Head of DFM at INN8 Invest, will speak to industry thought leaders, Jaco van Tonder, Adviser Services Director at Ninety One and Pieter Hugo, Chief Client and Distribution Officer at M&G Investments, about the growth of the living annuity industry, the suitability for all post-retirees, the risks as well as their views of potential solutions.
We will then chat with Joao Frasco, DFM CIO, and Carl Chetty, DFM PM about what we are (and will be) doing to help advisers in this very tricky space.
About the webinar
Living annuities are one of the most popular products used to manage the post-retirement income requirements of retirees in South Africa. It’s the flexibility of living annuities that makes them so popular – the ability to annually select drawdown levels, the ability to alter asset allocation and asset manager allocation at any given time. But it’s that flexibility that also introduces specific risks that are quite unique to living annuities when compared to other traditional forms of post-retirement products.
One of the biggest risks of living annuities is longevity risk. This is the risk that the living annuitant will live longer than expected, and that their savings will not be enough to support them in retirement.
The other risk often talked about is sequence risk. Sequence risk is the risk that the order in which a retiree receives investment returns in retirement can have a significant impact on the longevity of their savings. For living annuities, this means that if the annuitant starts withdrawing income during a period of poor investment returns, they may run out of money sooner than expected.
While post-retirees also face inflation risks including the rising costs of healthcare and other long-term care costs, it’s the longevity risk and sequence risk that often gives financial advisers and their living annuity clients the most headaches…Because it’s simply not that easy to create a long-term and sustainable portfolio that is robust enough to deal with these risks faced by living annuities. The industry has attempted to tackle the living annuity conundrum for many years now with so many different solutions provided by industry ‘experts’. The problem is that there is no silver-bullet answer in dealing with the management of living annuity incomes – however there are some approaches that are better than others and can increase the likelihood or probability of success.
Learning outcomes:
- Understand longevity risk
- Understand sequence risk
- Understand the growth of the living annuity industry and the number of post-retirees facing these risks in SA
- Understand potential ways of addressing the risks including total return approach and bucket-approach
- Understand the ways that are not effective in dealing with the problem
The speakers
Jaco van Tonder
Adviser Services Director
Ninety One
Jaco is head of Advisor Services in South Africa at Ninety One. Prior to moving into this role, Jaco was sales director for the South African Advisor team and head of distribution for Ninety One Investment Platform.
Having previously worked at Sanlam Group, Jaco occupied various positions which included heading up the product development for the Sanlam platform business, Glacier from 2000 to 2003, and heading up the business development and distribution team from 2003 to 2009.
He is a Fellow of the Institute of Actuaries, and holds a B.Sc (Hons) degree from the University of Stellenbosch.
Pieter Hugo
Chief Client and Distribution Officer
M&G Investments
Pieter joined M&G Investments in 2015 as Managing Director of M&G Investments Unit Trusts and Head of Retail Business; and in 2019 he was appointed as Chief Client & Distribution Officer. He is also a director of M&G Investments Southern Africa and M&G (South Africa) Global Funds ICAV.
With more than 20 years of industry experience, Pieter was previously employed at one of South Africa’s largest financial services groups, spending most of his time in various senior management positions in the asset management and wealth management businesses.
Pieter holds a B.Comm (Maths) degree from Stellenbosch University, and is a Fellow of the Institute of Actuaries (UK) and the Actuarial Society of South Africa. He completed the General Management Program at Harvard Business School in 2010 and completed a course in Behavioral Finance from Duke University during 2020.
Joao Frasco
CIO
INN8 Invest
Joao joined STANLIB Multi-Manager in February 2012, as Chief Investment Officer. He joined from the Alexander Forbes Group, where he started in September 2006 in the Asset Consultants division in a consulting role, before moving to head up investment research for Alexander Forbes Financial Services in 2008. Joao started his career in employee benefit consulting at Glenvaal in 1991 before joining the IT industry.
Carl Chetty
Portfolio Manager
INN8 Invest
Carl has extensive investment management experience in the DFM industry having worked as both an analyst and portfolio manager at Hollard Investments’ and Momentum Investments’ DFM teams.
He joined STANLIB Multi-Manager DFM on 1 September 2021 as a Business Development Manager, driven by his passion for working closely with financial advisors to enhance their practices and to drive better client investment outcomes through the use of DFM solutions. Carl holds a B.BusSci (Hons) from UCT and is a CFA charterholder. Outside of his career, he is an avid golfer, general sports enthusiast and has been playing the acoustic guitar since the age of 5.
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