Retirement advice in the UK is accelerating faster than predicted among advisers, prompting a rise in the use of centralised retirement propositions, reflecting the reflects the need for consistency and efficiencies across firms, new research has shown.
A report by Aegon and NextWealth, entitled Retirement Advice in the UK, found that nearly two thirds (60%) of advised assets were managed on behalf of retirement clients, up from 53% in 2018. Advisers had previously predicted in 2018 that it would take three years for this figure to reach 60%, but in reality the milestone was passed in little more than 12 months.
This trend is expected to continue, with advisers forecasting 65% of advised assets to be for clients receiving retirement advice by 2022.
In response, four out of ten (43%) advisers surveyed said they had a centralised retirement proposition (CRP) in place, and a further 16% said they will follow suit over the next year. This means that by the end of 2020, nearly six out of ten (59%) advisers will have a CRP in place.
Mid-size firms were found to be the most likely to use CRPs, with 68% of firms with assets under advice ranging between £50m to £249m saying they will have a CRP in place by the end of 2020. In contrast, smaller firms with assets under £50m were the least likely to adopt a CRP, with 50% expecting to have the system in place by the end of this year.
Ronnie Taylor, chief distribution officer, Aegon, said a combination of longer life expectancy and the impact of the pension freedoms had driven the growth in retirement advice.
Taylor said: “As the proportion of retirement clients grows, advisers are looking for ways to provide a consistent approach to advice while still focusing on providing personalised recommendations. One of the ways to achieve this is through CRPs and the projected growth of CRPs reflects the need for consistency and efficiencies across firms.
“While predicted to grow, there is still a large majority of firms who have not yet adopted a CRP. This may point to individual advisers having their own approach to tailoring advice within a firm or highlights the inherent complexities of this type of advice, particularly in larger firms where it may be difficult to impose a single advice process across all advisers.”
