The anticipated implementation date of April 2027 is driving this; some 47 per cent of advisors expect that over half of their clients will require an update to their financial and retirement plans prior to the proposals being introduced, the survey reveals.  

The primary strategies discussed with clients in relation to the proposals are increasing withdrawals to then gift out of normal expenditure (81 per cent), as well as changing the order in which assets are drawn down from tax wrappers (75 per cent). 

“The Autumn Budget proposals to include unused pension funds as part of the estate for inheritance tax has turbocharged conversations with clients, not just about pension retirement funding but their broader financial plan,” Gillian Hepburn, commercial director at Benchmark, part of the Schroders Group, said. “This includes increasing conversations around gifting and helping clients to understand the optimum time to transfer assets to the next generation. Financial planning businesses like Benchmark have a significant role to play when working with clients to explore the range of options available and also to ensure that advisors have the appropriate proposition and also the soft skills required for what can often be difficult family conversations.” 

Responding to other suggested regulatory changes, 71 per cent of advisors think that proposals to restrict savings into cash ISAs will encourage clients to invest more in stocks and shares ISAs. 

The survey, which encompasses the views of 272 UK advisors, was conducted post Liberation Day amid significant market volatility. It is therefore unsurprising that feedback indicates a shift in clients’ investment sentiment, with the percentage of advisors identifying that the sentiment of their clients is bearish rising to 43 per cent, up from 18 per cent in November 2024. In contrast, 10 per cent of clients are now bullish, a substantial decline from 40 per cent this time last year.  

Sixty-four per cent of advisors anticipated increased market volatility – this is the highest level recorded since data collection began in 2019 and up from 43 per cent in November 2024. Additionally, the proportion of advisors expecting lower global growth has tripled, rising from 8 per cent to 24 per cent, the survey reveals. 

Concerns about inflation have also re-emerged, while expectations of environmental disruption have declined to their lowest level since tracking began, with only 44 per cent expecting higher environmental disruption. This declining trend may reflect changing perceptions about the pace and impact of climate-related market disruptions.

Expectations for higher geopolitical disruption have also risen (77 per cent), and 55 per cent of advisors are now expecting deglobalisation to rise, indicating growing advisor concerns about the fragmentation of global economic systems. 

Given the recent market volatility and geopolitical backdrop, the survey showed that 81 per cent of advisors cited capital loss as their clients’ number one concern, especially since many advised clients are near or post-retirement. This has jumped from 49 per cent in November 2024. This shift highlights the critical role of advice and active management, with 39 per cent of advisors noting that some clients have adjusted their financial plans in response to changes in the economic and market landscape since the inauguration of US President Donald Trump. 

The survey also suggests an uptick in interest in using private market solutions as 19 per cent of advisors said they are considering this.

AI 
The acceptance of artificial intelligence is growing, the survey reveals, with 82 per cent of advisors seeing this as an opportunity rather than a threat to their business. This is a significant increase from 57 per cent in May 2023 with a reduction in the number of advisors who would never use AI in their business reducing from 27 per cent two years ago to only 7 per cent. 

Additionally, the survey shows that 37 per cent of advisors have already adopted some form of AI technology, nearly doubling from 21 per cent in November 2024. A majority (75 per cent) of advisors believe that the greatest benefits of AI lie in efficiency and automation. 

Regulation 
Consumer Duty, which came into effect in July 2023, continues to impact advisor businesses, the survey shows. When asked about its ongoing implementation, 33 per cent of advisors said that the assessment of fair value using client feedback remains their first priority to address. Concerns persist regarding the fair value outcome of The Consumer Duty which requires firms to ensure that fees and charges provide value for clients. Sixty-two per cent of advisors believe that this will exert pressure on charging models. 

Twenty-five per cent of advisors also said that the increase in employee National Insurance (NI) contributions has affected their business in a way that has made them take action.

“Recent data has shown that the fall in markets in April was erased by the rebound, showing how crucial it is to stay calm and remain invested,” Jamie Fowler, head of UK Wealth at Schroders, said. “At Schroders, we are firm believers in the value of advice and active management. The role of an advisor is thereby crucial in providing the expertise needed to help clients grow wealth in the long run while navigating short-term volatility and ensure their peace of mind.”