Brexit isn't financial advisers biggest nightmare

Brexit isn't financial advisers biggest nightmare

Brexit negotiations and the political uncertainty it has created isn’t top of the list of what is keeping financial advisers up at night, according to a poll.

Pension provider Aegon surveyed 100 financial advisers and only 6 per cent cited Brexit as the number one risk they and their clients face and just 1 per cent perceived the current political climate as the biggest threat.

Instead, half (52 per cent) of advisers are worried about the lack of planning for the long-term future from an early enough age.

According to figures from the Office for National Statistics (ONS) published in March, households are saving the lowest proportion of their income in more than 60 years.

Other long-term issues were identified as the second and third biggest risks, Aegon said.

Some 20 per cent of respondents believes the ageing society and increased life expectancy are the greatest threat, with 7 per cent citing the government needing to cut costs on items like the level of state pension as a major risk, with funding social care (6 per cent) closely following.

Earlier this year, analysis from the Government Actuary’s Department (GAD) showed that the national insurance fund – which pays the state pension and other social benefits – will run out of money around 2032.

State pension benefits are responsible for more than 90 per cent of the expenditure from the fund.

Steven Cameron, pensions director at Aegon, said in today’s world, more than ever before, individuals are expected to take responsibility for their own financial future.

He said: "Gone are the days of employers offering generous defined benefit pension schemes which meant individuals didn’t have to think about how they would fund their retirement.

"The government is facing up to the costs of an ageing society by increasing state pension age.

"Equally, today's younger generations face greater financial challenges than previous generations, whether from student debt or getting on the housing ladder."

According to Mr Cameron, it is not surprising that financial advisers see the biggest threat to the UK population’s long term financial security as leaving it too late to start planning their finances.

He added: "To someone in their 20s, retiring in their 70s will be far down the priority list. But making a start, including making the most of workplace auto-enrolment pension schemes, can make a big difference longer term.

"We can't afford to let Brexit uncertainty be seen as a further reason to delay."

Paul Stocks, financial services director at Dobson & Hodge, agreed that Brexit may well pose less of a threat to long term personal finance than, for example, the impact of uncapped self-funding for care or unplanned longevity.

He explained that while the decision of the UK to leave the European Union will have an impact, "diversification and broader financial planning can, to some extent, lessen the impact of short term market volatility".

He said: "If, however, Brexit triggers further exits from the EU, the threat of volatility could well spread.