- The vast majority (85%) of advisers have spoken with their clients in the last six months about how to adapt their finances or portfolios in the wake of soaring inflation.
- To manage the impact of rising inflation, advisers are most frequently altering pension drawdown strategy to reduce tax liability (23%).
- Advisers have also been working with clients to adjust retirement income plans (21%) and divest money away from Russian-linked assets, as required by sanctions (20%).
The vast majority (85%) of advisers have spoken with their clients in the last six months about how to adapt their finances or portfolios in the wake of soaring inflation, according to new research from abrdn.
A fifth (22%) of advisers have spoken to all of their clients about the impact of inflation on their finances, while just one in ten (12%) have yet to discuss changes with any.
To help clients manage the effects of inflation, advisers are most frequently altering pension drawdown strategies to reduce tax liability (23%) and adapting their investment portfolio to decrease risk (21%). More than one in six (17%) have also discussed a wider range of annuity options, while 14% have adjusted retirement income plans.
abrdn’s research also looked at advisers’ client conversations about higher taxes, market volatility and the ESG implications of holding or making investments in Russian-linked assets following its invasion of Ukraine.
A majority (85%) of advisers have discussed the impact of market volatility, 84% have discussed Russian-related ESG considerations and 83% have spoken to their clients about managing the impact of higher taxes.
Jonny Black, strategic director abrdn, Adviser, said: “Advisers are yet again supporting clients in another challenging environment. Many will not have experienced the record levels of inflation we’re currently living through, and I’d expect to see more people seek professional advice for the first time this year.
“People want to know how to mitigate the impact of inflation on their finances, but also to better understand why the economy is in this position in the first place. This underlines the value of advice. Advisers help clients answer the hard, technical questions, but also help put their minds at ease in difficult times.”
When it came to the impact of Russian-linked ESG considerations, advisers have most frequently been working with clients to adjust retirement income plans (21%) and divest money away from Russian-linked assets, as required by sanctions (20%)
Meanwhile, a further one in six (16%) advisers said they had divested client funds from Russian-linked assets out of clients’ personal choice.
Elsewhere, to help clients manage the impact of higher taxes, one fifth (20%) of advisers say they’ve increased the proportion of investments in a tax wrapper.
A further 20% have altered their investment portfolio asset allocation to increase risk and potential return to mitigate the impact of market volatility.
Jonny Black added: “It’s clear both advisers and clients are taking a range of actions. With further challenges ahead – including warnings of worsening inflation – firms will need to be prepared to continue engaging with clients to ensure they’re able to adapt to pressures and remain on the strongest possible financial footing.”
