"It’s positive to see that sentiment amongst advisers around the retirement advice part of their businesses has lifted too."
Against the backdrop of market declines and economic crises, retirement advice has remained a hugely important part of the financial advice industry, with demand growing in the past year, according to a new report from Aegon and NextWealth.
Advisers estimate that well over half (58%) of the assets they advise on are for clients receiving retirement advice, an increase from 55% the previous year. They expect this to continue to rise, reaching 62% over the course of the next three years.
This positive view of the significance of retirement advice has been consistent throughout the five years of the study.
In last year’s report, changing attitudes to work were driving demand for retirement advice, as clients reassessed their priorities during the pandemic, with a marked increase in clients retiring early.
This year, advisers have attributed demand to uncertainty and volatility in the market. 57% of advisers expect the current economic environment to increase demand for retirement advice. Advised clients’ views are in line with this: three quarters (75%) say that the economic situation of the past year has led them to consider changing their level of risk, the income they take or review how much and/or when they pass on money.
Changes to the funding of social care is seen as the second biggest driver of demand for retirement advice according to advisers (42%). Although the research was carried out prior to the delay to the new social care funding deal, it demonstrates a key area of opportunity for advisers. This is especially true as 58% of clients have either taken advice on this or are interested in doing so. However, only 44% of advisers currently offer advice here.
Ronnie Taylor, chief distribution officer at Aegon, commented: “After a tumultuous time over the past year, with volatility in the markets and regulatory change, retirement advice has remained a vital element of the financial advice industry. It’s positive to see that sentiment amongst advisers around the retirement advice part of their businesses has lifted too.
“The research shows that the cost-of-living crisis plays a huge part in client demand for retirement advice, which is perhaps not too surprising considering volatile markets, rising interest rates and high inflation will naturally impact financial plans.
“With many advised clients admitting they plan on reviewing how they manage their money, the findings highlight the value of getting professional advice. This can offer invaluable support in making good financial decisions in volatile times and in planning for retirement. With the new Consumer Duty on its way, the research also indicates key opportunities for advisers to add value and deliver good outcomes for their clients into the future.”
Heather Hopkins, managing director of NextWealth, added: “Since starting this research in 2018, we’ve seen a number of significant events that have impacted the demand for retirement advice. Each of those events, whether economic, political, regulatory or health related, were very different in nature but all demonstrate the importance of good quality financial advice when times are uncertain. The resilience and adaptability of those providing this advice has never been more in focus as we move through 2023.”
