I think it's fair to say that the last decade has provided many challenges for advisers who have clients approaching retirement. Looking at the annual returns of the FTSE, we have seen six years of positive growth and four years of loss.

This led to the reintroduction of the term "the lost decade", first introduced in Japan in the 1990s. This perfectly summarises the recent experience of FTSE investors who have seen their stocks move sideways for the last 10 years, even though the journey has seen great profits for some.

So what products can deal with this high level of investment volatility? How do you capture the growth in the good years whilst remaining invested, so that it can't be lost in future years?

To me that's the Holy Grail of investing. Somehow remaining invested and benefiting from the good times, but being protected from the bad. How many clients would like to hear about a solution which can deliver this?

The good news is there is a way of achieving this goal, through a process of 'insuring' a client's income at the product wrapper level. This is a solution which has been proven to deliver.

However, there is a misconception in the UK market that these products are only recommended at a time when a client needs immediate income. This is not the case. In fact it can be argued that the features they offer can be of most benefit to clients in the last 10 years prior to needing an income from their assets.

For such clients, you're likely to be choosing between the two investment strategies of:

• trying to grow the value of their assets by remaining invested and accepting the downside risks; or
• de-risking the portfolio through some form of 'lifestyling', reducing the potential downside but limiting the growth opportunity

The issue here is that for most clients, it's probably their last opportunity to try and boost their retirement funds, as they will be utilising them soon. Unfortunately, a large number of pension savers have not accumulated sufficient funds to provide an appropriate level of income in retirement.

As both investment strategies have benefits and risks, what happens if you choose the wrong one? What happens if your client stays invested and the markets turn against them as they are about to retire? The fund would not have time to recover.

Likewise, what if your client 'lifestyles' and they end up selling out of equities and buying Gilts and Corporate Bonds at the wrong time in the cycle, as we have seen happen in recent years? Let's not forget that 'lifestyling' does not remove the risk of capital loss and clients could also miss out on positive market performance.

So if you can 'insure' your clients against these risks and consequently remain invested in the markets right up to, and during, retirement to boost assets in the final years, why wouldn't you?

But they're really expensive aren't they? It's true that you don't get something in this life for nothing, so yes, you have to pay for this insurance. But the cost of the insurance can be as little as 20p or less for every £10 invested, so in many cases it's cheaper than car insurance.

But the big question is, what will it cost your client if they haven't bought this 'insurance' and the markets turn against them or indeed if annuity rates keep on plummeting?

So in summary, a unit-linked guaranteed income policy can deliver the following benefits for your clients as they approach retirement, regardless of how volatile investment markets may be:

• Protection against falling markets – The level of income is guaranteed for life, even when markets go down, as long as no transfers or additional withdrawals are made from the plan.
• Ability to invest up to 60% in Equities – Allowing long-term growth potential.
• Locks-in gains when markets rise – When markets are performing well growth is locked-in annually.
• Boosts deferred income even if fund value falls – If your client chooses to defer taking income straight away and the markets don't deliver, their income is guaranteed to rise through an annual deferral bonus.
• Guaranteed death benefit options – Protect the value of the retirement fund available for the benefit of dependants with various options available.

Lee Badger
Variable Annuity Sales Development Manager UK
Axa Global Distributors