BT Financial Group has launched a new product aimed at risk-averse clients that guarantees a "minimum outcome" at the end of an agreed term.
BT Wrap Capital Protection ensures investors a minimum outcome that is equal to the amount of the initial investment.
The client and adviser select a series of managed funds that they would like to protect from a list of over 80 funds. A set formula is then used to distribute the client's investment across the chosen funds and the BT Capital Protection Fund.
Investors have the option to make withdrawals or switch off the protection at any point, according to BT.
Head of retirement at BT Financial Group, Rodney Greenhalgh, said advisers and clients have been "crying out" for retirement products that preserve capital when markets fall, but provide opportunities for growth on the upside.
"Since the GFC we have seen a flight to safety as retirees who saw no alternative turned away from market exposure and re-weighted their portfolios to cash," he said.
Over half (53 per cent) of retirees aged 50-64 are holding cash to protect themselves against a capital loss, according to BT – and 47 per cent are only holding cash as a temporary strategy until markets improve.
The risk is that investors will be "cash locked" and miss out on opportunities for growth, according to BT.
"We have designed this in collaboration with advisers and investors every step of the way. What we have built is a unique capital protection product that is available on BT Wrap that is easy for advisers to use and gives clients a known minimum outcome with the opportunity for growth without the restriction of being locked-in," said Greenhalgh.
