Demographic bomb threatens UK intermediary businesses

UK financial advisers are excessively reliant on clients who are aged 70 or older, according to the findings of a survey by Russell Investments.

The manager, which has some $237bn (€222bn) invested globally, and a further $2.4trn (€2.25trn) under advice, said its research found almost half, 46% of UK IFAs had a client base in which between 20%-50% were aged over 70.

Furthermore, almost one in 10, 8% had more than half their clients over this age.

However, for those advisers handling retirement related savings, there is an opportunity to generate more business from younger clients; the UK’s so called ‘pension freedoms’ mean that more people aged over 55 will be able to access their retirement savings.

When it comes to the number of clients drawing down income following pension freedom reforms introduced by the government this year, the majority of IFA-advised people have drawn down less than a fifth of their pension pot. Almost a third have withdrawn between 20-50 percent of their funds, with only seven percent drawing down more than half of them.

Nick French, managing director and head of UK wealth management at Russell Investments, said that “IFAs have an opportunity to appeal to and attract a younger demographic. This is particularly important considering the current age demographic for most clients is heavily skewed towards older generations who are more familiar with the value that financial advice can bring. Advisers need to be communicating and engaging with today’s younger generation on the importance and value of advice, otherwise the demographic issue some of them currently face could have implications down the line for future revenues and cash flows.”



Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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