Coronavirus  

Half of advisers see clients delay retirement due to virus

Half of advisers see clients delay retirement due to virus

Half of advisers have seen clients defer their retirement as a result of income losses triggered by the coronavirus pandemic, Schroders has found.

According to the firm's latest survey of UK financial advisers, loss of income due to the sharp market downturns in March driven by the Covid-19 outbreak, has forced many clients to reconsider their plans for later life.

The survey of 63 advisers found almost half had seen their clients delay their retirement as a result of reduced capital. 

It comes as the vast majority of advisers, at 95 per cent, predicted the virus outbreak would cause a major global recession, although 66 per cent had faith that fiscal and monetary policy could mitigate some of the fallout. 

 

Top three financial concerns of advisers' clients in relation to the coronavirus crisis. Source: Schroders Adviser Survey April 2020

Doug Abbott, head of UK intermediary at Schroders, said the Covid-19 pandemic had already brought about "profound changes" to the investment community.

Mr Abbott added: "Capital preservation becomes understandably a key priority for investors who now favour an intensified mode of interaction with advisers along with a more active style of investing.

"The actual impact of the pandemic on investor sentiment remains however surprisingly mild according to our survey, even if retirement plans for half of advisers’ clients seem delayed for now."

The Schroders survey found investor sentiment between November 2019 and April 2020 has stayed largely the same despite the unfolding global crisis, with 45 per cent of clients said to be neutral and 38 per cent "slightly bearish". 

The results were only mildly different to those recorded in 2019, when advisers reported 45 per cent of clients had a neutral investment attitude and 41 per cent were slightly bearish. 

The survey pointed to the benefit of financial advice, with 100 per cent of the advisers agreeing their clients had been broadly understanding about the impact of the pandemic on their portfolios. 

Alistair Cunningham, financial planning director at Wingate Financial Planning, said he had a small number of clients who were actively considering retirement this year, but none of them had changed their plans despite a "few wobbles".

Mr Cunningham said: "I think the reason they are mostly steadfast is that we’ve built robust financial plans, in many cases for over a decade, and we consider events like this - actually far worse - as part of our annual discussions, particularly around capacity for loss.

"Additionally, those in well diversified portfolios have only typically seen reductions in their portfolio over 12 months of 0-5 per cent, which is not as pessimistic as our ‘bad’ scenarios.

"Finally, there’s a general feeling that whilst the impact of the virus might be hard economically, in the short-to-medium term it has actually reduced the expenditure of many households quite significantly."

In March FTAdviser reported clients approaching retirement had scrambled for advice amid concerns they faced "catastrophic" short-term pension losses due to the growing coronavirus crisis.