Talking Point  

Advisers expect clients will have to accept less income in future

Advisers expect clients will have to accept less income in future

The nature and condition of markets means that clients will need to accept a lower income yield from their portfolios in future, according to a majority of the advisers who responded to our latest FTAdviser poll.

Our data shows that 62 per cent of advisers believe clients will have to accept a lower income in future, while 38 per cent believe previous income levels can be maintained. 

The poll was conducted via the FTAdviser twitter account. 

Advisers putting together income portfolios for clients have faced the challenge in recent years of the yields on government bonds being at record lows, while many of the stocks that have been staples of equity income portfolios for decades, such as the big oil companies, may be structurally challenged in the world after the pandemic, while many of the stocks likely to benefit from the deep societal and economic changes that may be the outcome of the pandemic are companies which pay little in the way of dividends. 

The third challenge facing advisers is that clients are  likely to live much longer in drawdown than was the case in the past, meaning the pot of money has to last longer, reducing the capacity for the client to deplete capital.

david.thorpe@ft.com