The cost of living crisis and market volatility has driven a rise in demand for retirement advice, a new report from Aegon and NextWealth shows.
According to the report “Managing Lifetime Wealth: retirement planning in the UK”, advisers estimate that demand for retirement advice accounts for 58% of their assets under advice, up from 55% the previous year. They expect this to continue to increase, reaching 62% over the course of the next three years.
Aegon and NextWealth said this trend has been consistent throughout the five years of the study.
Advisers attributed growing demand to uncertainty and volatility in the market. Nearly three fifths (57%) of advisers expect the current economic environment to increase demand for retirement advice. Advised clients echoed this view, with 75% stating that the economic situation over 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 was also shown to be a considerable driver, according to 42% of advisers. Although the research was carried out prior to Chancellor Jeremy Hunt announcing a delay to the social care reforms, Aegon and NextWealth said the findings demonstrate a key area of opportunity for advisers. The report found that 58% of clients had either taken advice on later life care or were interested in doing so but only 44% of advisers offer advice in this area.
Ronnie Taylor, chief distribution officer at Aegon, said: “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.
“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.”
Taylor said that with many advised clients admitting they plan on reviewing how they manage their money, the report highlights the value of seeking professional advice.
He added: “This can offer invaluable support in making good financial decisions in volatile times and in planning for retirement.”
Heather Hopkins, managing director of NextWealth, commented: “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 residence and adaptability of those providing this advice has never been more in focus as we move through 2023.”
Aegon and NextWealth, Managing Lifetime Wealth, Q. What percentage of the assets you advise on personally are for clients receiving retirement advice? And Q. Looking ahead 3 years, what percentage of the assets you advise on personally will be for clients receiving retirement advice? N=221/212/212 advisers
