Surveys
UK Budget Enhances Need For Retirement Income Advice – BNY Investments

New research from BNY Investments and NextWealth – entitled “Retirement advice in the UK: time for change?” – reveals the value of client advisor relationships and the way advice firms are responding to the UK’s Autumn Budget and the Financial Conduct Authority’s thematic review of retirement income advice.
New research from BNY Investments and NextWealth shows that 73 per cent of financial advisors believe that changes to tax rates and allowances will increase demand for retirement income advice.
The survey of 208 UK financial advisors and 253 consumers of retirement advice, aged 55+ with a minimum of £100,000 ($125,000) of investable assets, was conducted in September 2024, ahead of the UK Budget announcement in October.
UK Chancellor Rachel Reeves Autumn Budget includes the abolition of the resident non-domiciled status, hikes in capital gains, inheritance tax and employers' National Insurance contributions. Inheritance tax thresholds – charged at 40 per cent above a threshold of £325,000 – will stay frozen until 2030; inherited pensions will be brought into inheritance tax from 2027. The research also included qualitative interviews with 10 financial advice professionals conducted between October and November 2024.
It found that the treatment of pensions on death will have wide-sweeping impacts, with 61 per cent of advisors stating that this would impact all or most of their clients. Nearly three quarters of advisors said they typically recommend clients to draw down other assets before pensions, to limit the impact of inheritance tax.
Advised clients are also concerned about income and outgoings in retirement. Outside of pensions, the top sources individuals expect to draw upon include primary property (80 per cent), inheritance (32 per cent), buying to let (22 per cent) and second homes (18 per cent). The top three concerns financial advisors hear from retirement clients are that they are running out of money (50 per cent of financial advisors cite this); inflation and cost of living (48 per cent cite this); and long-term care costs (42 per cent cite this).
Client confidence in financial advisor relationships is evident from the research, BNY said. The majority (92 per cent) of advised clients feel on track to achieve the retirement they envisaged. Eighty-one per cent said they have peace of mind from entrusting their finances to an expert. Eighty-five per cent believe their financial advice fees provide value – key aspects of the Consumer Duty regulation.
How advisors are evolving their retirement
offering
Financial advisors anticipate that assets held by their
retirement clients will increase to 61 per cent of
their total business in the next three years. Yet almost
half of financial advisors expect the impact of regulation
to limit the time they can take to deliver financial advice and
constrain their ability to meet demand.
BNY Investments and NextWealth research identified several areas where financial advice firms are still focusing efforts to adapt their businesses in response to recent regulation, including the Financial Conduct Authority’s (FCA) thematic review of retirement income advice (RIAR).
Withdrawal rates: The regulator says withdrawal rates need to reflect individual client circumstances and findings show that cashflow planning to do this is increasing. However, over a quarter of financial advisors (27 per cent) always or often use a fixed rate or range to set withdrawals where clients are using drawdown to create an income for life, suggesting that further change is needed.
Retirement advice models: Over a quarter of financial advice firms currently have no plans to introduce a common and consistent decumulation advice model – sometimes called a Centralised Retirement Proposition. Firms are having to find a balance between a preference for tailoring financial advice to individual clients with the expectation that financial advice is delivered consistently.
Client understanding of financial advice received: The regulator is keen to ensure firms can show that their clients understand the advice they are given. Eighty-nine per cent of advised clients scored their financial advisors seven out of 10 or higher when ranking satisfaction with the clarity of advice, but advisors still need to demonstrate that understanding in practice.
Record keeping: Improving record keeping is the area firms expect to have to concentrate on the most. Over half of financial advisors surveyed have made, or expect to make, changes to record keeping for retirement income client advice and interactions.
“These findings show that financial advisors play a central role in helping individuals achieve the retirement they envisage despite operating in an increasingly complex environment,” said Richard Parkin, head of retirement at BNY Investments. “We are committed to helping financial advisors both understand and navigate changes, to enable them to focus on their roles in delivering client service and retirement income outcomes to the UK population,” he added.
BNY Investments, a large asset manager, manages almost $2 trillion across a range of traditional and alternative assets. NextWealth helps wealth management firms to adapt to future developments in wealth, offering research and consultancy services.