IFAs shying away from exposing clients to volatility

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Aug 15, 2019

Advisers are reluctant to increase the investment risk of clients who stagger their retirement, according to research commissioned by life insurer LV=.

The study given exclusively to Money Marketing sheds light on the investment challenges advisers face when dealing with clients who are likely to be in drawdown.

Forty-four per cent of advisers say they advise clients who continue to work, or have other sources of income when they access their pension pot, not to make changes to the risk profile of their investments.

Twenty-three per cent of advisers say they advise clients who stagger their retirement to stay away or move away from assets with more potential exposure to volatility.

Over half (58 per cent) of clients who access part of their pension and stagger their retirement have the remainder of their pot invested in a relatively equal mix of equities, bonds, alternatives and cash.

Fifty-four per cent of advisers say clients who have staggered their retirement and continue to work while drawing on their pension are no more likely to have chosen assets with more potential exposure to volatility than those who have stopped work.

The study of 206 independent financial advisers between 28 June and 3 July 2019 was conducted by consultancy Opinium.

LV= managing director of savings and retirement Clive Bolton says: “For anyone approaching retirement or anyone recently retired with pension assets that remain invested, the prospect of market volatility is likely to be a worrying one.

“In particular, the group often known as the mass affluent – those with between £100,000 and £500,000 in retirement savings – have potentially the most to lose by being overly exposed to volatile assets.

“With so many retirees now taking up the option of leaving their pension fund invested, the role of good financial advice has never been more important, particularly as clients look to navigate uncertain and volatile times.”

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