INVESTMENTS & PENSIONS

Richard Parkin , Head of Retirement BNY Mellon

Investment Management

Retirement advice has been a huge growth area for financial planners since the introduction of pension freedom . Many wealthier clients already had many of the pension flexibilities that George Osborne ’ s surprise announcement in March 2014 offered . However , the accompanying changes to the pension tax regime and the low interest rate environment paved the way for more holistic retirement planning focused on invested solutions . While we have had a few wobbles along the way , markets have been relatively kind for those investing in retirement , at least until 2022 happened .

In our recent research report , Life Beyond Work : The changing face of retirement , we find clients ’ longstanding concerns about retirement – having saved enough and being able to maintain their standard of living – joined by concerns about inflation and market uncertainty with these expected to intensify over the next few years . On the back of this , advisers told us that meeting client expectations is one of their biggest business challenges , second only to regulation . Our indepth interviews with consumers point to the emerging Generation X having very different financial circumstances to the baby boomers who have been the main audience for retirement advice over the past two decades .

MAINTAINING THE STATUS QUO ?

Our discussions with industry experts such as industry associations , consultants and business support firms pointed to a need for advisers to adapt their business models and advice offerings to reflect these pressures . While we found many firms are looking at adapting what they do , we were struck by how many firms seemed adamant that they would continue with their current approach in terms of the nature and scope of the advice they give , its cost and the solutions used . Does this mean that the experts are overestimating the impact of these pressures or are firms being unrealistic about the need for change ?

Perhaps the biggest factor in advisers being able to maintain the status quo for retirement advice is that demand appears to be continuing to run ahead of supply . Financial Conduct Authority ( FCA ) statistics show that the number of clients receiving ongoing advice on retail investments from financial advice firms rose 44 % over the five years to the end of 2022 while financial adviser numbers rose by only 6 %. Over the same period , revenue per adviser across all firms rose by 26 %. Furthermore , only 16 % of firms we surveyed said finding new clients was a business challenge with only 7 % putting this as their primary concern .

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