Markets are volatile – is now the time to consider a new MPS option?

What a quarter. With markets reacting sharply to the Trump tariff announcements and ongoing geopolitical tensions, the drama is far from over. And with the effects being felt around the world, many advisers will continue to field calls from anxious clients for a while yet.

For those in decumulation - particularly those withdrawing larger sums or relying on their portfolio for a steady income - these spikes in volatility can feel especially painful.

We all know the traditional wisdom: stay invested, markets recover. And that advice isn’t wrong. But when the portfolio is being drawn down, and withdrawals coincide with falling values, it creates a double hit. One that’s hard to recover from.

So the question is: is there another way to help your income clients ride out this volatility?

At Crossing Point, we believe the answer is yes.

Why drawdown clients need more than just “stay the course”

When your client is accumulating wealth, short-term losses are generally something to be endured. There’s time to recover, and there’s no need to sell during downturns. But in decumulation, the dynamic changes.

Clients withdrawing income from a falling portfolio are forced to sell more units to achieve the same level of income. That accelerates capital depletion, reduces future income potential, and can seriously undermine the long-term sustainability of a retirement strategy.

This is called ‘sequence of returns risk’, and it’s one of the biggest threats in retirement planning. Market timing might be discouraged – but ignoring the impact of volatility during withdrawal periods can be just as risky.

That’s why we designed our Guardian portfolios – a Managed Portfolio Service built specifically for clients in drawdown, with a focus on smoothing returns, reducing volatility and minimising drawdowns over whole business cycles.

So what’s different?

The key ingredient in Guardian is trend following – a time-tested investment approach that focuses on momentum, rather than prediction.

Where traditional buy-and-hold strategies remain fully invested regardless of market conditions, trend following dynamically adjusts exposure based on observable price movements. When assets are in a confirmed upward trend, they’re held. When they break downward, exposure is reduced, often shifting into defensive assets or cash-like holdings.

This isn’t about ‘timing the market’ in the speculative sense – it’s about reacting systematically to what the market is actually doing. And it’s been proven to reduce downside risk, which is exactly what income investors need.

You can find out more in our latest article: How trend following helps client portfolios in volatile markets

Let’s take a look at the numbers

Over a five-year period from 31 January 2020 to 31 January 2025, a £500,000 investment in the Guardian Balanced portfolio, with a 4% annual income withdrawal, would have outperformed a portfolio based on the Investment Association 20-60% benchmark by £40,682.78.

That’s £40,682.78 more (8.6%) retained over 5 years, the equivalent of two year’s worth of income - a real-world illustration of how reduced volatility and smarter risk management can improve outcomes for income-seeking clients. These benefits are particularly significant during continued periods of high-stress - the Covid crash, the Ukraine invasion, the UK mini-budget fallout - the strategy showed its worth.

You can view the full performance comparison here: Guardian Portfolios

Why this isn’t like other MPS options

Guardian isn’t another accumulation-focused MPS hoping to serve a new purpose. It’s a deliberate alternative for a very real need in a growing market. It’s for advisers who are wondering what else is out there, and for clients who need steady income without unnecessary shocks.

And it’s for a market that’s finally waking up to the demands of decumulation.

The regulator too is taking a closer look as part of its advice guidance boundary review. The FCA’s Kate Tuckley, head of department, consumer investments said last year: “We want to be a market where consumers can make good decisions, where they have the support they need and where they can access products that are suitable for their needs and characteristics.” She highlighted harms such as people running out of money if they are not properly advised, not having a sustainable income.

Final thought

In an environment where volatility is here to stay, perhaps some clients require more than a simple “buy and hold” strategy. Advisers certainly need tools that reflect real-world risks – not just textbook strategies.

We’re not saying the traditional approach is wrong. We’re just saying there is an alternative - a smarter, more responsive way to help income clients navigate what’s next. Surely it’s worth considering, even if you’re just a little curious about what else is out there?

Please email us – we’d be happy to explain our approach in more detail.