EICB finds large gaps between advisers and investors on retirement confidence

by | May 23, 2023

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Annuities revival drives advisers and consumers to reassess retirement income options. Consumers are overconfident of retirement readiness.

The latest Embark Investor Confidence Barometer* (EICB) reveals that, as the economic environment has shifted to one of higher interest rates and rising bond yields, annuities have returned as an attractive option for consumers and advisers. The greater confidence shown by advised clients over non-advised investors about their retirement plans also indicates the value advisers are delivering to their clients.

The resurgence of annuities is reinforced by the fact that 73% of surveyed advisers agreed1 they would now recommend a blended approach to retirement income for the majority of their clients. The blended approach – which combines the growth potential of flexible income drawdown with the ability to annuitize part of the pension fund to provide a guaranteed income stream – is now also the favoured option among all investors surveyed*. However, there are still high levels of uncertainty among investors since a third (33%) of non-advised consumers remain unsure about the best approach to take. By comparison, just 17% of advised consumers surveyed said they were uncertain, illustrating the benefits of financial advice.


The Barometer has indicated that shifting consumer priorities are also fuelling increased interest in annuities. Rises in the cost of living are pushing investors to seek the greater certainty provided by a guaranteed income streams in the face of higher monthly outgoings.

Concerningly just over a third (34%) of advised consumers surveyed agreed1 that they have reduced/will have to reduce their investments (ISA/GIA) due to the ongoing cost of living crisis and higher energy costs. Just under one in five (19%) agreed1 they have reduced/will have to reduce their pension contributions.

Fully understanding the funds and income needed in retirement is clearly a challenge for a significant proportion of consumers. Our survey unveiled two noteworthy gaps in retirement readiness. First is the greater confidence of advised consumers (64%**) over non-advised consumers (58%**) surveyed, in their ability to stop working at the age they wish to.


The second retirement confidence gap is between advisers and investors. Remarkably, fewer than a quarter of surveyed financial advisers (23%) say they are confident that the majority2 of their clients will have enough money to be able to meet their retirement plans. Nearly half (46%) say only a minority3 of their clients will have enough money to meet retirement plans. By contrast, a significant majority (69%) of advised consumers and (61%) of non-advised consumers surveyed are confident** they are or will be able to meet their retirement plans.

While successive Barometers identified a considerable retirement confidence gap, the fact that this persists in the face of current cost of living challenges is concerning. It suggests some complacency on the part of investors, meaning advisers may need to do more to educate clients about the reality of their retirement prospects.

Jamie Drewett, Intermediary Distribution Director, Embark Group, commented: Attractive annuity rates and innovations in product design enabling a blended approach to retirement income have put a renewed emphasis on adviser-client conversations. The blended approach allows advisers to offer appropriate clients a best of both worlds mix of security and flexibility. Guaranteed income supplies peace of mind to investors who need to cover higher living expenditures, while income generation potential is protected by holding the rest of the pension in flexible drawdown.”


To access the full, Embark Investor Confidence Barometer report, please go to: www.embarkgroup.co.uk/icb 

Barometer survey details

* The Embark Investor Confidence Barometer is a twice-yearly survey of over 1500 people conducted by Censuswide for Embark Group (Embark), which surveyed the following groups between 16th March and 23rd March 2023:

  • 501 advised consumers (those that have a financial adviser) with a minimum of £100k investible assets, who have a pension and are aged 35-70
  • 504 non-advised consumers (those that do not have a financial adviser), with a minimum of £100k investible assets, who have a pension and are aged 35-70
  • 503 (18+) financial advisers who have clients, whose company/firm has assets of less than £500 million

About the research:

Agreed is a combination of ‘Strongly agree’ and ‘Somewhat agree’ answer options* Within the survey this was defined by: ‘A blended approach giving up some of the bond allocation to buy annuities to reduce sequencing risk’

** ‘very confident’ and ‘somewhat confident’ combined answer options.


2 Majority is a combination of ‘Slight majority (51%-75%)’ and ‘Vast majority (More than 75%)’ answer options

3 Minority is a combination of ‘Vast minority (Up to 25%)’ and ‘Slight minority (26%-49%)’ answer options

The survey was conducted by Censuswide: www.censuswide.com. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.


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