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Vitality research reveals adviser concerns over potential stock market collapse and its impact on pension drawdown

According to new research by investments provider, Vitality, the biggest threat to clients in drawdown is a stock market collapse.

The data, which surveyed 204 independent financial advisers last month, reveals that almost a quarter of (23%) believe that a stock market collapse would be the biggest threat to pension drawdown. This figure has doubled in the last year, having previously been just one in 10 (11%) in 2021.

The figures also show that 15% believe regulation is the biggest threat to drawdown, closely followed by sequencing risk (14%) and under-estimating one’s own life expectancy (14%).

Justin Taurog, Managing Director of VitalityInvest, commented: “According to our research, advisers fear that the biggest threat to clients in drawdown is a stock market collapse. Given that this research was conducted before markets reacted to the Ukraine invasion, such fears are likely to have been heightened, particularly in light of inflation and the wider economic outlook.

“This is problematic, as sharp market falls have the potential to exacerbate sequencing risk for clients in drawdown. Although markets have started to recover from losses in early March, the situation remains extremely unpredictable and so advisers need resilient, well diversified portfolios to protect clients against future market conditions. At VitalityInvest, we want people to make sure they can really make the most of their investments, which is why we currently offer well diversified portfolios with a combined fund and product charge of 0.40% or less.”

Earlier this year, Vitality launched a new product charge offer of 0.15% or less per year and a new transfer service to make it easier and simpler to transfer ISAs and pensions.

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