- Report finds the factors topping the list of those driving increasing demand for retirement advice are ageing population and medical advances (67% of advisers) and current economic environment (58%).
- However, affordability tops list of factors suppressing demand (19%).
Today sees the launch the sixth edition of their retirement advice report Managing Lifetime Wealth: Navigating Retirement Advice1. The report, by NextWealth and sponsored by Aegon, provides a comprehensive analysis of the ever-evolving retirement advice market.
The report examines the changing landscape of the retirement advice industry, mapping both enduring trends and transformative shifts. It also uncovers the influence of recent regulatory and geopolitical events, revealing how these external forces have contributed to a strong market for retirement advice.
Drivers
This year, advisers have credited the greatest demand to our ageing population and medical advances. Over 2 in 3 advisers (67%) see people living longer changing the demand for retirement advice. This ties in with Aegon’s Second 50 report2 which highlights how valuable advice can be when navigating the many variables in life after 50.
The ongoing cost-of-living crisis, alongside higher interest rates and volatile markets also continues to impact demand, with 58% of advisers citing that the impact of the economic environment will prompt clients to seek financial advice.
This was followed by current pensions and tax rules and allowances, including abolition of the Lifetime Allowance and increases in annual allowance rules3. 49% of advisers see increased demand from clients affected.
Steven Cameron, Pensions Director at Aegon, said:
“Once again, this year’s report from NextWealth highlights the importance and vibrancy of the retirement advice market, with many factors contributing to healthy demand. The most significant driver of demand for retirement advice is the ageing population and medical advances. Aegon’s Second 50 report2 further explores the opportunities and challenges created by the prospect of a 100-year, multi-stage life. People are on average living longer and having to bear more of their own financial risks in a defined contribution world, which means that making informed retirement decisions has never been more important or personal to each individual.
“Other key drivers are the current economic climate, and recent changes to pension tax rules and annual allowances. These are creating real pressure to advise affected clients.
“However, amidst this positive surge, concerns linger. Affordability remains a barrier to retirement advice, with a growing “advice gap”. The FCA and Treasury are currently consulting on the Advice Guidance Boundary Review, offering an opportunity to explore simplified advice solutions and targeted support for those currently priced out of receiving help.
"Advisers are also aware that negative headlines and regulatory change such the FCA Consumer Duty could depress demand. While the Consumer Duty may be adding new considerations to the provision of advice, we hope that longer term it will further improve confidence amongst consumers that the advice they are receiving is of consistently good value.”
Heather Hopkins, Managing Director of NextWealth, said:
"For the sixth year running, our research evidences that retirement advice remains a cornerstone of financial planning. It helps clients achieve peace of mind and financial security and is a critical component to the business of financial planning. While demand for retirement advice remains strong, there are challenges on the horizon. Concerns about the affordability of financial advice for those who need it most weigh on the minds of many advisers. Negative publicity further clouds the landscape, and the ever-shifting regulatory environment adds complexity and cost. This report, kindly sponsored by Aegon, is a testament to the evolving landscape of retirement advice. It's a reminder that financial planning is about addressing the very real concerns and aspirations of clients."
References
1 NextWealth research for the 2024 Managing Lifetime Wealth: retirement planning in the UK report. The latest research was conducted in November and December 2023 with 200 financial advisers. Yearly comparisons are offered to earlier versions of this report with the following number of financial advisers: 212 in 2022, 212 in 2021, 221 in 2022.
2 The Second 50 report. Aegon, launched September 2023
About NextWealth
NextWealth is a research, data and consulting business helping firms to adapt and thrive amid disruption. NextWealth’s customers are platforms, asset managers, technology companies and financial-advice businesses. More information www.nextwealth.co.uk
About Aegon UK
In the UK, Aegon offers pension and investment solutions to over 4 million customers. Aegon employs over 2,000 people in the UK and together with around 600 people employed by Atos, we serve the needs of our customers. Figures correct as at 31/12/2022. More information on aegon.co.uk
Aegon UK is part of the wider Aegon Group, based in the Netherlands, whose roots go back to the first half of the nineteenth century. Since then, Aegon has grown into an international business, with over 29 million customers in multiple countries and over 747.4 billion EUR of revenue generating investments (as at 30/12/2022). More information on aegon.com
The information in this press release is intended solely for journalists and shouldn’t be relied upon by any other persons to make financial decisions.