Retirement is not one investment phase

One of the strengths of managed accounts is flexibility.

As Australians spend longer in retirement, that flexibility becomes increasingly important. Advisers need to help clients draw a regular income while keeping enough invested for the years ahead, adapting portfolios as their needs change over time.

Retirement shouldn't mean having to rebuild a portfolio from scratch. In many cases, suitable existing investments can continue to play an important role within a client's broader retirement strategy. The challenge is how retirement-focused solutions can complement those investments as client needs change.

For me, that's an important principle and one that shaped the way we approached retirement portfolio construction.

A practical way of addressing this challenge is through a time-horizon, or bucketing, approach.

Rather than treating retirement assets as one pool, this approach separates investments according to when they are likely to be needed. Some assets may be intended to support near-term spending needs, while others remain invested for future income requirements or longer-term growth.

It can also help advisers manage sequencing risk, reducing reliance on selling longer-term growth assets to fund withdrawals during periods of market weakness.

Importantly, the objective was to give advisers greater flexibility to meet changing retirement needs by introducing purpose-built portfolios alongside suitable existing investments.

That philosophy ultimately led to the development of the Russell Investments Short-Term Portfolio and Russell Investments Medium-Term Portfolio, both now available through CFS Edge. Advisers can use them individually or together, depending on their clients' needs and existing investments. 

The portfolios were only part of the solution.

We also wanted to make it easier for advisers to apply this thinking in practice. That's why we developed the Retirement Calculator, designed to help advisers determine allocations across different retirement horizons, model a personalised glide path into retirement, and guide ongoing rebalancing as client circumstances change.

For us, effective retirement solutions provide structure without becoming rigid. 

Retirement is not one investment phase. Portfolio construction should recognise that clients' income requirements and investment needs will change over time.