A third of clients are more risk-averse post pandemic, according to data from abrdn. Yet those with advisers among happiest to take more risk.
A third of 1,000 advice individuals surveyed by abrdn said they now want to take less risk with their investments than they did before the UK first entered lockdown in March 2020.
More than half (51%) cited a change in their investment or financial priorities for their lower risk appetite, while 42% said they had a reduced capacity to absorb loss.
In contrast, 27% of advised individuals said they wanted to take on greater investment risk, with half (50%) of this group saying they are happy with more risk because they feel more confident in the advice they receive, while two fifths (42%) said their capacity for loss had increased.
Alastair Black, head of industry change at abrdn, said: “Seismic events like Covid-19 can cause big shifts in investor risk appetite. However, the divide we’ve identified between those who now want less risk and those who want more is considerably more significant than we expected. It confirms the uneven financial impact of the pandemic and the challenge advisers are currently facing to support clients with very different outlooks.
“The research also underlines the link between capacity for loss and investment risk and how the former is having an even bigger effect on client decision making in the wake of the pandemic. This comes almost five years after the FCA said advisers must consider capacity for loss during suitability assessments, both separately from and in addition to investment risk.”
Black added: “Looking ahead, it’s encouraging to see those that are happy to take on more risk cite confidence in their adviser. This shows how invaluable advice has been during such a turbulent financial period and the value advisers will continue to deliver as clients shape their portfolios as the UK enters a new phase of its post-pandemic recovery.”
