Embark Investor Confidence Barometer

The adviser-client retirement confidence chasm

Advisers open up on clients’ retirement prospects
The impact of ‘long economic Covid’ on clients’ ambitions
Why the value of advice continues to shine for investors

Financial advisers are still not sharing clients’ confidence in their retirement prospects, but the gap is closing, the Embark Investor Confidence Barometer reveals.

Only 6% of advisers expect the vast majority (upwards of 75%) of their clients to have enough money to meet their retirement plans.

However, more than two-thirds of clients are confident they are saving enough and will be able to stop working when they wish to – though only around a third say they are ‘very’ confident.

While a confidence gap remains, it is shrinking as retirement hopes are on the rise among advisers and clients.

Since the inaugural Barometer in February, the proportion of advisers who expect at least half of their clients to have the money to meet their retirement plans has risen from 32% to 57%.

Meanwhile, the proportion of clients confident they will have enough money has climbed from under two-thirds in February (60%) to over two-thirds now (69%).

Retirement confidence is also up markedly among non-advised investors.

Back in February, just over half (55%) were confident they would have enough money to meet their retirement plans – this has now risen to 70%.

Long economic Covid

While the economic impact of Covid-19 on consumers has been uneven – with some able to accumulate savings while others lost income – advisers are citing it as the main blocker to clients’ retirement prospects.

More than two-fifths (41%) of advisers said the financial impact of Covid-19 was affecting clients’ ability to have enough money to meet their retirement plans.

However, advisers pointed to multiple reasons for clients not having enough retirement savings, with 39% also selecting lifestyle choices (such as holidays and school fees), 36% picking an over exposure to investment risk, and the same proportion pointing to medical costs.

Advice when approaching retirement

The importance of financial advice to investors’ retirement confidence continues to shine in the latest Barometer, as it did in February 2021.

For those within five years of retirement, there is a sharp divergence of confidence between those with and without an adviser on the approach they have taken.

For instance, when it comes to annuities, 74% of advised individuals are confident in their approach versus 54% of people without an adviser. Meanwhile, in relation to remaining invested into their retirement, advised women are significantly more confident than any other group (84%).

“The gap in retirement confidence between advisers and their clients is a striking finding – as it was in our inaugural Barometer.

Which party is closer to the truth? Is it possible that clients’ retirement plans are not being effectively communicated or reviewed?

Advisers may feel clients are on track for a comfortable retirement, but not necessarily the one they desire. Meanwhile, we know that not all clients take their adviser’s recommendations at face value and even resort to social media as a secondary source of information.

Perhaps the gap in confidence between advisers and clients will always exist. The challenge for advisers will be to try to keep it as narrow as possible.”

Phil Bungey
Former Chief Executive Officer, Advance by Embark