Historically low bond yields and the spate of dividend cuts mean clients are likely to need to take more risk or accept lower income, according to Ben Seager-Scott, head of multi-asset funds at Tilney.
Mr Seager-Scott said a major part of financial planning in the current climate will be to work with clients to help them make smaller income yields work within their budgets.
He said: “I would suggest that a big part of the challenge is the difference between what investors want and how markets work.
"I think a lot of income-seeking investors look at their own expenditures versus their investment assets and work back to determine what income they need as a percentage yield figure, which doesn’t really change.
"The problem is that pretty much all investment assets have a running yield figure that is in some way related to the base interest rates and monetary policy, so they change over time.
"Low interest rates look set to stay here for some time, and dividends are being cut across the world.
"As a start, investors need to look at their risk profile, and recognise that in this environment, having a lower risk portfolio is likely to limit the income that can be generated.
"I think this is actually an area where getting good financial advice can really help, and potentially the client could look at alternative strategies for funding their expenditures rather than relying on natural investment income.”
Some parts of the UK government bond market are now paying a negative yield, while traditional safe haven income stocks such as oil companies have been forced by the current economic conditions to cut dividends.
Mr Seager-Scott said the current arid market conditions for income investors are unlikely to get better quickly.
He said: “In investment terms, even in a low risk portfolio, some limited exposure to equities could be acceptable, and with that in mind, as well as equity income funds that look for good dividend yields, another option could be those using covered-call strategies, which essentially give away some of the capital appreciation potential from an equity portfolio in exchange for a small income stream.
"There are also now some absolute return funds which offer strategies providing income rather than just capital returns.”
Francis Brooke, who runs the Troy Income and Growth investment trust - which maintains a generally cautious approach to markets - said: “With businesses prioritising the preservation of cash, the outlook for the market dividend is now more uncertain than at any time since 2008.
"The number of deferred or cancelled dividends, including those already declared, is extensive and climbs every day.
"We expect more companies will take this route and in particular those that have received government support. Although we believe the current situation will prove temporary, we cannot predict the shape of the recovery in dividends or business performance.