Distribution Focused Strategies
Discover how our use of Distribution-Focused Strategies (DFS) can help meet your need for steady cash flows in retirement with extensive flexibility and control.
You worked hard to save for the future and put careful thought into saving for and living in retirement. As you approach the transition into retirement, you’re looking for ways to make that vision happen. You’re also searching for answers to the uncertainties that lie ahead:
›› What will it take to reach your desired level of comfort and freedom?
›› How can you plan so that your resources last your lifetime?
Created With You in Mind
Distribution-Focused Strategies were designed to address the growing need for a savings plan that lasts a lifetime. DFS offers greater control, flexibility and lower fees than many other investment alternatives by bringing you:
›› Strategies created to address your need for predictable cash flows in retirement
›› An approach aimed at helping you make your assets last a lifetime
›› Access to your money any time, without a surrender penalty
›› Low costs compared with other investments
›› Tax management to help reduce your taxes and enhance your income
›› The ability to pass remaining assets on to your heirs
Customized to Your Personal Financial Need
Because everyone’s situation is different, DFS portfolios are tailored to your individual cash flow needs, tax situation and risk tolerance. To achieve this highly customized experience, your DFS assets are spread among three pools (Short- Intermediate- and Long-Term) within a selected strategy — each with its own distinct risk/return objective.
The strategy you select is based on your desired cash flow and time horizon. By allocating your assets among these three different pools, DFS is better able to pursue the goals of providing you with a steady stream of fixed-dollar cash flows and preserving your principal investment for as long as possible.*
The way your distributions are sourced can have a big impact on your performance over time. With DFS, distributions are first funded with the income generated by your investments — primarily dividends, interest payments and capital gains distributions. If the income is not enough to meet your target, a portion of your principal will be sold in order to achieve that goal.
When principal is sold, the first assets targeted are those with over-weighted positions. This would include assets that have appreciated in price to the point where they now represent a larger-than-desired percentage of your portfolio. In this way, you avoid selling assets that are under stress, instead focusing on selling assets that have met or exceeded their price targets.
For greater tax efficiency, assets with capital losses would also be targeted when principal is needed to fund your distributions. Investments with embedded long-term capital gains would be sold only as a last resort, as would assets in under-weighted parts of your portfolio.