IFAs have seen an increase in new business enquiries as a result of the government’s pension freedoms.
This is the conclusion of new research from Investec Wealth & Investment. The majority, 80%, has seen an increase, whilst 68% expect to see the number continuing to grow over the next five years.
What’s more, 73% of advisers predict that there will be an increase in the average portfolio size held by clients seeking pension freedoms-related advice. Of the 73%, opinions vary as to how much the average portfolio will grow. Most (34%) think it will grow by more than £100,000, 22% think £50,000 and 7% £250,000.
The research also revealed that a key source of new business resulting from the pension freedoms has been Defined Benefit (DB) to Defined Contribution (DC) transfers. The figures show that 68% of intermediaries have received enquiries from pension savers seeking guidance on this issue. Furthermore, most advisers believe that they will continue to receive DB to DC transfer enquiries from consumers for a further nine years, generating a substantial long-term new business opportunity.
Head of Intermediary Services, Investec Wealth & Investment Mark Stevens said: “Advisers have seen strong levels of demand among pension savers as a result of the pension freedom reforms, many of which have involved guidance around DB to DC transfers. Our research suggests there is little sign of this new business stream slowing down any time soon.
“Advisers who have had to turn away numerous enquiries from savers whose pension pots have been too small to service profitably will be the first to agree that it’s not the quantity that matters but the quality. In this regard, the research paints an encouraging picture with the majority of intermediaries predicting that average portfolios will increase in size over the coming years.
“Given the complexities involved in providing retirement planning advice in a volatile and fast changing investment climate, many IFAs have become increasingly reliant on the support of an experienced discretionary investment manager.”