UK advisers are prioritising diversification in client portfolios, boosting allocations to alternatives and emerging markets, the latest Schroders UK Financial Adviser Survey reveals.
Over the past 12 months, 36% of advisers increased their exposure to alternatives and 32% to emerging markets, with the survey indicating this upward trend is likely to continue into next year.
The survey, which captures the views of 221 advisers, suggests a more cautious outlook for markets. Currently, 31% expect lower equity returns and 19% anticipate lower bond market returns relative to long-term historical averages. These figures have risen from 18% and 13%, respectively, in November 2024.
Advisers are also anticipating high disruption due to geopolitics (60%) and higher disruption as a result of technological advances (68%), likely driven by the rapid developments in artificial intelligence (AI), as well as concerns about overvaluations and fears of bubbles in developed markets.
For the first time, the survey also examined fiscal debt sustainability, with results demonstrating a clear majority (61%) of advisers expecting significant disruption from rising public debt burdens.
This growing sense of disruption is reflected in expectations for higher market volatility, with 61% of advisers anticipating increased volatility – up from 34% in May 2023 and 43% a year ago – prompting more to seek uncorrelated return drivers across a broader range of assets.
This is reflected in the findings, which show that 60% of clients invested in multi-asset and MPS portfolios have access to liquid alternatives and gold in their asset allocation.
In addition, adviser sentiment towards Long-Term Asset Funds (LTAFs) is evolving, with 11% now expecting some of their clients to invest in these vehicles. Notably, the proportion of advisers who do not anticipate clients investing has fallen from 41% to 32% over the past year, while the majority (57%) remain undecided. This shift suggests growing awareness and receptiveness but also highlights the ongoing need and demand for information and education, as LTAFs remain in the early stages of development in the UK advice market.
Turning to client sentiment, there is a relatively even split between those feeling bullish and bearish, while the largest group – 48% – remain neutral. Capital loss continues to be the number one concern for 51% of clients, suggesting that wealth preservation is a greater focus than specific market movements being monitored by advisers.
Financial Planning
Ahead of the UK Budget on the 26 November, the survey found that advisers were concentrating planning efforts on the areas most exposed to potential tax changes. The primary area of attention has been tax-free cash withdrawals from pensions, amid concerns that the current 25% tax-free allowance (capped at £268,275) could be reduced or replaced with less favourable terms.
Inheritance tax (IHT) planning has also been a priority, with 27% of advisers reporting that they have reviewed estate planning strategies with their clients.
Regulation
Regulation remains the top priority for advisers, with 40% identifying it as their primary concern, although this has fallen from 57% in November 2024. There has also been a slight increase in the proportion most concerned about client servicing, with 20% now ranking it as their main business issue, up from 16% a year ago.
Business model evolution
Since 2019, there has been a marked ageing trend in the average age of advisers’ client bases. This year, there was a notable increase in those reporting that their clients are aged 65 or over, rising from 25% in November 2024 to 38%. While the 51–64 age bracket remains dominant at 60%, 49% of advisers say their clients’ age profile has increased over the past five years.
There has also been an increase in the minimum asset size required for new clients, with 30% of advisers now setting this threshold at over £200,000, up from 24% last year.
The ageing client base may be contributing to concerns about the impact of intergenerational wealth transfer, with 66% of advisers now expressing concern – up slightly from 62% last year. Despite these concerns, 85% do not have a differentiated strategy for younger investors, and 93% do not offer a tailored approach for women, particularly those who are divorced or widowed.
AI
Since the survey began tracking adviser engagement with AI, there has been a notable shift in advisers’ willingness to incorporate it into their businesses. Only 8% now say they never expect to use AI within their advice process, down from 27% in May 2023. Most striking is the increase in those who report already implementing AI, rising to 48% from 21% a year ago.
Jamie Fowler, Head of UK Wealth at Schroders, said:
“As we approach the end of another year and look ahead to 2026, the results of this year’s survey underscore the impact that global disruption and ongoing volatility are having on asset allocation decisions. Growing caution towards developed markets means advisers and clients will increasingly need to access a broader range of investments.
“This is where active management truly comes into its own. With these trends expected to persist, the need for more diversified and resilient portfolios is rising. Data shows that while cash may seem safer, the chances of its value being eroded by inflation are much higher. In light of this, and with potential changes in the upcoming UK Budget, advice is crucial to help clients navigate uncertainty, remain invested, and make informed choices to achieve their long-term financial goals.”
The full 2025 Schroders UK Financial Adviser Survey Report can be viewed here.
