The findings showed a shift in approach by advisers.
Sequencing risk shifted in 2020 from a somewhat ethereal concept for many to a reality. Advisers were able to show how their withdrawal strategy helped buffer their clients against the impact of market volatility.
All but 9% recommended a cash buffer to retirement clients, and 39% of advised clients have a secure income to cover basis needs and only 33% of advisers recommended an annuity to clients who don’t have any secure income.
One quarter of advisers are still not segmenting their clients; of those that do, 45% segment based on their life stage, with 41% segmenting based on complexity and need.
42% are using a fixed rate to calculate sustainable withdrawals.
The focus of advice given about the transfer of wealth has shifted too.
Intergenerational wealth transfer is now being considered more keenly from the perspective of client need not asset retention. According to the survey, advisers overwhelmingly offer advice on inheritance tax planning and gifting wealth but are less focussed on meeting with the children of clients.
The total return approach to portfolio construction remains the most popular, while the income approach continues to decline in popularity.
Jo Kite, Head of Marketing and Propositions at Ascentric, said:
“The biggest takeaways from our research was the commitment of adviser firms to get right to the root of client need in such a challenging environment. The commitment to quickly and consistently deliver this will have cemented the huge bond and trust between adviser and client.
“More firms were embracing client segmentation strategies based on the needs of their client rather than purely asset-based and were also considering new ways to structure retirement portfolios to improve client outcomes”.
