Regulation and tax changes pose the biggest challenges to advisers, according to research from Aegon.
After the pandemic led to delays in consultations and regulatory changes, Aehgon said the push to catch up for lost time is creating a roadmap of regulatory change in 2022.
Commenting on the survey amongst financial advisers, conducted by Next Wealth, Steven Cameron, pensions director at Aegon, said: “The Chancellor’s approach to freezing the pensions Lifetime Allowance and Annual Allowance and the threat of possible further cuts is also seen as a particular advice challenge. While we hope any furth short term changes here are unlikely, freezing these allowances particularly when inflation is at a decade high means more people could be dragged into paying more tax on their pension pot unless receiving careful advice.
“A small but notable number of advisers also see adjusting advice in light of the regulator’s evolving focus on ESG as a challenge to providing retirement advice. Responsible investing is expected to be a big theme this year with advisers playing a key role in building a wide variety of customer attitudes towards green and sustainable investing into their suitability assessments.”
Advisers also cited stock market instability caused by the Covid-19 pandemic as a challenge for retirement advice in the coming year.
Cameron explained: “Both Brexit and the Covid pandemic have created significant market volatility in recent times. Advisers are adapting by moving to more dynamic tools to meet their clients’ objectives and provide sustainable income strategies amid expected continued market volatility.
“Covid restrictions have also caused disruption to face-to-face meetings which have traditionally been the foundation of the client-adviser relationship. While many clients have benefitted by accessing advice for the first time through new technologies, advisers note concerns over any further lockdowns as a challenge to providing retirement advice for some of their clients.”
In addition, Aegon said advisers also face the challenge of balancing investment risk objectives with income requirements and macro-economic uncertainty.
Advisers have to ensure income for retirees with low-risk investment appetites keeps pace with the ring cost of living, particularly for retirees with longer term horizons and those with smaller pension pots.