Greater market uncertainty and regulatory requirements call for financial advisers to rethink the needs of their retired clients
In recent years, financial advisers have tended to use similar investment strategies for accumulation and decumulation clients. This approach worked when market conditions were relatively favourable. However, the volatility seen in 2022 has highlighted the limitations of traditional risk assessment and investment approaches many financial advisers recommend to retirement clients.
Furthermore, The Financial Conduct Authority (FCA) pointed out in its thematic review that there is a need to address the specific risks facing retirees, who rely on their investments for regular income. Addressing those needs has taken on more urgency given the prevailing market uncertainty and challenging economic conditions.
While maintaining completely separate portfolios for retirement clients isn't always necessary, it is nonetheless essential for financial advisers to demonstrate that their recommended investment strategies are suitably tailored to their needs.
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