Brinker to Roll Out Distribution Strategy for Retirement Spending
Brinker Capital announced plans to launch its Personalized Distribution
Strategy, a systematic approach to retirement spending and investing.
The product will launch toward the end of the third quarter of 2009, and is intended to enable advisers to support clients’ short- and long-term retirement spending needs, according to a Brinker news release.
The strategy consists of two elements: a Cash Liquidity Reserve and a Brinker Destinations portfolio. The Cash Liquidity Reserve consists of 18 months of cash, from which the client can begin drawing immediately. As the cash balance is lowered by the client’s monthly withdrawals, Brinker Capital will automatically sweep in additional cash generated from its investments in dividend- and income-producing mutual funds, the company said.
Brinker said a stop-loss of six months of cash will be maintained so that, regardless of market conditions, the liquidity cash reserve will be replenished. If for any reason the cash reserve falls below the stop-loss floor, Brinker will automatically refill it by modestly trimming some of the strategies’ holdings. Conversely, when the markets are outperforming, Brinker will increase the cash reserve.
The remainder of the client’s retirement assets will be placed in one of Brinker’s Destinations portfolios, Brinker’s investment management program that provides mutual fund asset allocation strategies based on an investor’s risk tolerance, retirement time horizon, and financial goals.
Quarterly, Brinker Capital will provide advisers with a spending report to share with clients, detailing: withdrawals over the past trailing 12 months, withdrawals as a percentage of total cash in reserve, principal spent to date, and estimated number of years left before the portfolio is depleted.
Beyond this, Brinker Capital has created a spending policy with the ultimate intention of allowing a client to maintain their spending, the company said. Advisers will have access to a set of endowment-like spending rules that focus on maintaining principal while also achieving stable income from the portfolio.
“We’ve systematized the Personalized Distribution Strategy to the point where, if advisers and their clients use our tools and follow the spending policy, the portfolio should meet the client’s spending needs,” said Noreen Beaman, principal at Brinker Capital. “Barring any unforeseen, major spending needs, our modeling shows little reason to sell out from the portfolio, ensuring a constant flow of cash into the liquidity reserve.”