Delivering good outcomes for clients approaching and in retirement

Over the past five years we have worked alongside Richard Parkin on this study and have charted the continued rise in demand for retirement advice.

Advisers tell us that 58% of their client assets are for clients receiving retirement advice, and they expect that share to grow further. This is the single most important aspect of a financial advice firm’s business in the UK. There hasn’t yet been a quiet year for delivering retirement advice. This year’s rise in demand comes against a backdrop of a cost-of-living crisis and a new set of regulatory rules in the shape of the Consumer Duty.

This year we have changed our methodology to reflect the sharper regulatory focus on the outcomes delivered to clients. As well as interviewing advisers as we have done each year, we also sought the views of advised clients on the retirement planning service they receive.

This report defines current practices and approaches to managing lifetime wealth for clients, allowing financial advice professionals to benchmark their own approaches against those of competitors. Whilst most advised clients are broadly satisfied, our findings indicate room for improvement in some key areas, as well as a tension between what advisers want to be valued for and how clients measure value.

As this is our fifth annual report on retirement advice and we also reflect back on what has changed and not changed over the course of the study.

Methodology

The 2023 report findings are based on quantitative and qualitative research conducted in November and December 2022:

• Online quantitative survey of 221 financial planners
• Online quantitative survey of 209 end consumers of retirement advice
• In-depth qualitative interviews with 10 financial planners and 10 consumers – all currently active clients receiving financial advice on investable assets of at least £100,000 excluding home but including pension.
• Comparisons are offered to earlier versions of this report which were also based on a similar approach of qualitative and quantitative methodologies with financial planners.

Key findings

• Impact of the cost of- living crisis and market volatility: Among those looking to change portfolio risk, 70% plan to reduce their risk
• Demand for advice: Uncertainty and volatility are the most important factors driving demand
• Services offered: Beyond core retirement planning activity, advisers are most likely to have helped clients with claiming State Pension and other entitlements and helped them with wills and trusts.
• Approach to delivering retirement advice:
  • Only 22% of advisers are still providing defined benefit transfer advice, down from 60% in 2018. Of these, a third expect to stop or significantly reduce activity over the next 12 months. The use of Centralised Retirement
  • Propositions have not grown as many expected with 52% of advisers currently using a CRP compared to 46% five years ago.
• Investing in retirement: The percentage of advisers who ‘never’ recommend a DFM has fallen sharply in the past two years.