With rising demand for sustainable income in retirement and mounting regulatory scrutiny, financial advisers are reassessing how best to support clients approaching and in retirement. Richard Parkin, Head of Retirement at BNY Investments, believes there’s cause for optimism – particularly when income strategies are approached with greater structure and intent. In the following interview with IFA Magazine’s Editor, Sue Whitbread, he shares his insights on how advisers are evolving their approach, and why a Managed Income strategy could be the key to delivering more stable and suitable retirement outcomes for clients.
Richard Parkin, Head of UK Retirement at BNY Investments, argues that a more structured approach to income – particularly through Managed Income strategies – offers significant potential for both client outcomes and operational delivery. In this conversation with Wealth DFM’s Sue Whitbread, he explores how the retirement income challenge is evolving, and why the BNY Mellon Multi-Asset Income Fund (MAIF) may offer a compelling solution for advisers and DFMs alike.
SW: Richard, how are advisers currently helping clients to structure their investments in order to fund their retirement income, and what trends do you see emerging?
RP: “Retirement income advice plays an increasingly vital role – not just for the clients receiving it, but also for the advice firms delivering it. In our recent research, Retirement Advice in the UK: Time for Change?, conducted with NextWealth late last year, we found that around 57% of advised assets are already linked to clients approaching or in retirement. That figure is expected to rise to 61% within the next three years. So, it’s a growing priority for advisers.
“When it comes to how advisers are currently generating income from an investment portfolio for these clients, our research told us that the total return approach, where income is generated by selling down assets, still dominates. About half of advisers told us that they use it all or most of the time. That’s perhaps not surprising – many simply continue with the same portfolios used during accumulation, which are typically total return in nature. This has worked reasonably well in a market environment where capital growth was relatively easy to achieve and access to drawdown was more straightforward.
“But that landscape is changing. With the FCA placing greater scrutiny on retirement income suitability – especially through the Consumer Duty lens and the Thematic Review – we’re seeing signs that advisers are rethinking their approach. Regulation is nudging the advice market to consider not just how much income can be drawn from an investment portfolio, but how reliably and sustainably it can be delivered too.
“One area gaining renewed interest is natural income – by that I mean using the dividends, coupons, and interest generated by investments to meet clients’ spending needs. While only around a third of advisers say they use this approach regularly, we believe it’s poised to grow in relevance. It’s an intuitive way to generate income, and when implemented well, it can create a more transparent and potentially less volatile experience for clients.
“There’s also the so-called “bucket” approach, where assets are segmented within the portfolio according to short-, medium-, and long-term income needs. This sits somewhere between total return and natural income in terms of popularity, but again, we expect it to become more widely used in the coming year.
“What’s really key here is a shift in mindset: it’s clear that advisers increasingly need to assess risk to income, not just risk to capital. Those two things are related, but not identical. A client may experience stable income from a portfolio even if the capital value is more volatile – and that can be a perfectly acceptable outcome. The regulatory direction of travel supports this thinking, and advisers who lean into that shift will be better placed to deliver consistent, reliable outcomes for their clients in retirement. There are signs that advisers are starting to do that, which is clearly a positive – but we think there’s further to go.”
SW: You mentioned natural income as an option – which seems like a natural fit for retirement clients. What do you see as the main strengths and limitations of this approach for advisers – and their clients – as part of the retirement income planning process?
RP: “Let’s start with the positives about using a natural income approach. I’d argue that such an approach makes a lot of intuitive sense for retirement clients – it’s aligned with both their financial objectives and the way the FCA is encouraging advisers to think. After all, if a portfolio can generate a stable, sustainable income from underlying dividends, coupons and interest, that helps manage income-related risk in a way that’s very transparent. And from a regulatory perspective, that’s key. The Consumer Duty and FCA’s Thematic Review place a strong emphasis on ensuring retirement income is resilient and suitable over time.
“There’s also a compelling investment rationale behind a natural income approach. High-quality companies make careful decisions about how much profit to retain and how much to return to shareholders, and if you’re selecting those businesses well, you can generate a sustainable level of income over time. That’s what we aim to do as equity income managers – identify those companies that consistently get that balance right.
“Natural income also offers a degree of inflation protection. Equities in general can provide a hedge against inflation over the long term, but equity income strategies, in particular, have historically performed better in periods of inflation surprises. That can be especially reassuring for clients concerned about preserving their purchasing power in retirement.
“The third key benefit is operational – it allows more of the client’s assets to remain invested. With a total return approach, advisers often need to hold two to four years’ worth of income in cash to avoid selling down growth assets during market dips. That’s understandable, but it means a chunk of the portfolio is out of the market. With a natural income approach, cash holdings can be smaller – more of a contingency than a structural buffer. That means more assets remain invested, and often more of those assets stay under the adviser’s oversight, rather than sitting outside the advised portfolio.
“That said, there are some valid challenges. The most commonly cited concern is that natural income may not generate enough income to meet a client’s needs. That might have been true in the past, particularly in low-yield environments, but we’re now seeing opportunities emerge. For example, the BNY Mellon Multi-Asset Income Fund (MAIF) is currently yielding around 4.5%, which is broadly in line with the commonly used 4% withdrawal rule. That makes it a credible option for advisers aiming to meet income targets without dipping into capital.
“The other big concern is around income variability. Unpredictable income flows can make budgeting and cashflow planning tricky, and not all platforms are set up to handle variable income payments efficiently. This is where a Managed Income approach can help – by focusing on delivering a more stable, predictable income stream without relying on a rigid, high-yield target. It brings structure and reliability, while still aligning with the natural income philosophy.
“So, while natural income has its limitations, there are evolving ways to address them. With the right multi-asset strategy in place, we think advisers can unlock its full potential – and deliver income solutions that are not only robust but better tailored to meeting clients’ needs in retirement.”
SW: And turning specifically to the BNY Mellon Multi-Asset Income Fund (MAIF), what are the defining features of such a Managed Income approach, and how does it support both clients’ and advisers’ needs?
RP: “As we discussed earlier, one of the biggest concerns with using a natural income from investments for retirement is whether it can deliver enough income – consistently and sustainably – to meet clients’ needs. That’s precisely where a Managed Income approach comes into its own, and it’s central to how we’ve designed MAIF. It’s been successfully delivering for clients for a decade under the guidance of its very capable fund manager, Paul Flood, who is ably supported by the team here.
“Firstly, the fund starts with prioritising an attractive yield. At the point of investment, advisers and clients need confidence that the portfolio will be producing sufficient income to meet their needs – typically aligned with the 4% withdrawal rule many advisers use. MAIF is currently yielding around 4.5%, which gives a strong starting point. We’re firm believers that it’s the pounds and pence of a monthly income in a client’s bank account that really matter, not the headline yield on a fund. Once the client is invested, that ceases to become so relevant.
“But equally important is that the income generated is stable and predictable. Clients don’t want surprises when it comes to how much income they receive month to month – they’ve got bills to pay after all. MAIF distributes income in 12 equal monthly payments, with a balancing payment at year-end. This creates a structure that feels familiar to a client – more like a regular salary with an annual bonus. That predictability helps both clients and advisers with budgeting and planning. After all, it’s pounds and pence that count, not a yield figure from a fact sheet. For advisers, it also makes it much easier to match income to spending needs through cashflow modelling and to structure tax-efficient withdrawals from wrappers like pensions or ISAs.
“Of course, income stability alone isn’t enough. Clients also need income that grows over time to maintain their lifestyle in retirement in the face of inflation. And the best way to support growing income is through growing capital. Unlike traditional income funds that often prioritise yield at the expense of growth, MAIF is deliberately structured to deliver both. This dual objective supports the client’s long-term financial wellbeing and helps advisers too. Another advantage for the adviser is that if they’re taking their fees as a percentage of assets under management, they’ll find that their revenue should be growing over time as well.
“How do we achieve this combination? The answer lies in flexibility and diversification, which is why MAIF uses a multi-asset approach. Particular areas we would look at for doing some of the heavy lifting on income just now would be using asset classes such as alternatives and fixed income for example. That frees up the rest of the capital to be invested in areas which are likely to generate growth. Of course, that will give us added diversification benefits too. We’re constantly thinking about how we can change the asset allocation to get the right balance between not just paying today’s income but thinking about how we grow the assets so that we can grow the income in the future whilst also building growth for tomorrow. The flexibility to shift allocations in response to market dynamics gives us the ability to smooth out the income stream and support long-term capital appreciation.
“This structure also helps address one of the major adviser concerns – income variability. Knowing exactly what income the fund will deliver each month helps simplify not just financial planning, but also the operational side of advice. There’s no need to manually adjust withdrawals or worry about whether the income distribution from a fund will be enough to meet a client’s needs. MAIF brings a level of certainty and simplicity to portfolio management that’s increasingly valuable in today’s advice landscape.
“An often-overlooked benefit is the role that a Managed Income approach can play in pre-retirement planning. It’s pretty obvious why it resonates so well for retired clients; however, by investing ahead of retirement and reinvesting the income, clients can benefit from compounding – buying more units, and in turn generating more income over time. This creates a powerful pathway to grow their future income stream. In fact, over MAIF’s 10-year track record, income on a £100,000 investment has doubled – from around £280 a month to over £560 a month. That’s real-world evidence of how deliberate, long-term planning can deliver results for clients.
“Ultimately, what we’re hearing from advisers is that retirement income is becoming more complex – but also more important. Clients want confidence and clarity, and advisers need tools that support their planning and regulatory obligations. A Managed Income approach, delivered through a fund like MAIF, helps meet both sets of needs – offering a scalable, compliant and client-friendly way to deliver income in retirement. That’s why we’re seeing so much interest in it now, as advisers reassess their strategies in the light of regulatory changes and changing client expectations too.”
A powerful, practical alternative
As advisers face the dual challenge of securing long-term retirement income for clients and meeting rising regulatory expectations, traditional drawdown strategies may no longer be enough. Natural income – when deliberately and flexibly managed – offers a compelling alternative. But to be truly effective, it needs structure, consistency and an eye on long-term outcomes.
That’s where the BNY Mellon Multi-Asset Income Fund (MAIF) stands out. With its decade-long track record, structured monthly payments, and dual focus on income stability and capital growth, MAIF embodies a modern, Managed Income solution. It’s a strategy that not only supports adviser planning and compliance but also gives clients the clarity and confidence for clients to be able to enjoy retirement on their terms – with peace of mind that their finances can deliver.
As retirement advice continues to evolve, solutions like MAIF are not just relevant – they’re increasingly essential.
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About Richard Parkin
Richard is Head of Retirement for BNY Investments. In this role he is responsible for working with intermediary clients on developing their approach to retirement planning and investment. He also acts as a spokesperson for the firm on retirement issues particularly as they relate to investment. Richard has over 30 years’ experience in the industry, focused entirely on Defined Contribution (DC) pensions and retirement. Prior to joining BNY Investments, Richard ran his own business providing strategy consulting to pension providers and asset managers and producing a series of research reports on the DC and retirement advice markets. Much of his career was spent at Fidelity International where he led its workplace proposition team before taking the role of Head of Retirement for the UK business in 2013, just before the introduction of pension freedom and choice. Richard is also a non-executive director and Deputy Chair at the FSCS and chairs the Investment Association’s Retirement Income Committee.
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