Advisers see continuing impact of tough economic environment on client behaviours

New research from Royal London, the UK’s largest life, pensions and investment mutual, has found 41% of advisers are having more conversations with clients about investments and the economic environment compared to two years ago at the start of the cost-of-living crisis in late 2021.

Clients are also accessing more of their money. During the same period, 34% of advisers saw an increase in the level of drawdown withdrawals, while 33% of advisers have seen an increase in clients pulling money out from pensions or investments to help family members.

The climate of rising interest rates, coupled with volatile market conditions over the last two years, saw 37% of advisers noting an increase in clients moving money to cash. On a positive note, 36% of advisers have seen a reduction of clients cancelling protection policies.

Clare Moffat, pensions expert at Royal London, said:

"The last few years have been challenging for many, no matter where you may be on the ‘wealth ladder’. Unsurprisingly, the economic instability and higher inflation coupled with the increase in interest rates has seen a significant move to cash.

"It’s also interesting to see the increase in the number of people using their savings to help family members, demonstrating the financial instability across generations. This confirms a trend we saw in adviser research we conducted earlier this year which found a quarter of requests are from clients who want to release money for their adult children*.

"The value advisers bring to a client relationship is never more important than in times of uncertainty where they can offer advice and reassurance. It also demonstrates the cost-of-living crisis has had an effect across the economic spectrum creating dependencies that perhaps weren’t once there."

* Bank of mum and dad bailouts for adult children in cost of living crisis - Royal London