Inflation, volatility and Russia/ESG part of advice conversations

28 July 2022

Most advisers have talked to clients about adapting their finances or portfolios to stave off the impact of soaring inflation, as well as about market volatility and Russia/ESG considerations, says abrdn.

The investment group said 85% of advisers had spoken with their clients in the last six months about managing the risk of inflation. Just over a fifth (22%) said they had raised it with all of their clients, while just one in ten (12%) have yet to discuss changes with any of their clients.

Altering pension drawdown strategies to reduce tax liability was deemed the most popular option among advisers (23%), while 21% have adapted their investment portfolio to decrease risk and 17% have also discussed a wider range of annuity options. In addition, abrdn said 14% of advisers have adjusted clients’ retirement income plans.

Abrdn said advisers were also discussing the impact of market volatility (85%) with clients, while 84% have discussed Russian-related ESG considerations and 83% have spoken to their clients about managing the impact of higher taxes.

Jonny Black, strategic director abrdn, Adviser, said: “Advisers are yet again supporting clients in another challenging environment. Many will not have experienced the record levels of inflation we’re currently living through, and I’d expect to see more people seek professional advice for the first time this year.

“People want to know how to mitigate the impact of inflation on their finances, but also to better understand why the economy is in this position in the first place. This underlines the value of advice. Advisers help clients answer the hard, technical questions, but also help put their minds at ease in difficult times.”

To help clients cope with Russian-related ESG factors, 21% of advisers have been helping them to adjust retirement income plans and 20% have worked to divest money away from Russian-linked assets as required by sanctions. A further one in six (16%) advisers said they had divested client funds from Russian-linked assets out of clients’ personal choice.

Black added: “It’s clear both advisers and clients are taking a range of actions. With further challenges ahead – including warnings of worsening inflation – firms will need to be prepared to continue engaging with clients to ensure they’re able to adapt to pressures and remain on the strongest possible financial footing.”

Professional Paraplanner