Clients continue to face elevated financial difficulty despite inflation dropping to near the target level, according to Aegon’s latest Adviser Attitudes report.
Aegon’s research partner Opinium spoke to 200 advisers and found 33% have received an increase in queries from clients since 2021.
Older clients were the most eager to understand how they should adapt their financial plans to reflect the difficult economic environment, with 58% of queries coming from over-55s.
According to 54% of advisers spoken to, the most common action taken by clients was to delay their retirement in favour of working and saving for longer. This was followed by an increase in the number of clients choosing to take an annuity (46%) and a jump in those reducing their retirement income (32%).
Despite the growing number of advised clients choosing an annuity, only 11% of client assets are held within them. Instead, the researchers found drawdown remains the dominant investment strategy for most retirees, with 67% of client assets invested in such products.
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Other notable finding included 70% of advisers believing that sticking to your current financial plan is the best recommendation for clients who are concerned about financial challenges. This is far greater than the second-most common recommendation, with only 9% suggesting their clients should switch investments.
Lorna Blyth, managing director, investment proposition, said: “Our research shows that the UK’s savers and retirees have been struggling to catch up after three years of significant financial challenges.
“Professional financial advice is a hugely valuable part of financial planning, but never is this more apparent than in difficult economic times. The fact that a third of advisers have reported an increase in queries from their clients is further evidence of that, with the work done by advisers in the past few years having been a vital and appreciated support mechanism for many.
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“It’s also not a huge surprise that over-55s represent the bulk of queries posed to advisers, given many of them will likely be close to or in retirement, and so have less time to combat and recover from recent challenges,” she added.
“It’s interesting to see how recent times have changed advised client behaviour, too, particularly when it comes to delaying retirement. As financial challenges have mounted, many pre-retirees may have been concerned that their savings would be unable to meet rising costs now, let alone in the future. The result is a greater proportion of advisers seeing their clients choose to continue earning and saving for longer, possibly until they feel their retirement income will be sustainable.”
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