Advisers are focusing on locking in the so-called ‘Brexit bounce’ for retirement savers amid concerns that stock markets could be heading for a significant correction this year, according to new research from MetLife.
The research shows that 31% of advisers plan to contact clients about protecting pension savings by locking in gains they have seen since the EU Referendum result and 67% plan to offer clients a review of their finances.
The need to protect capital is even more pressing for clients close to retirement – around 44% of advisers are recommending clients planning to retire within five years should lock-in gains now underlining the need for guarantee and lock-in solutions.
A major motivation is growing fears about a stock market downturn, with 58% of advisers saying they are concerned about a significant correction this year which increases risks for savers about to retire.
The FTSE-100 has increased by more than 6% since the referendum result after an initial slump and is now at a one-year high with the Bank of England rate cut and £170 billion stimulus package boosting markets and potentially returns for retirement savers who can lock-in gains.
MetLife’s research found advisers have already seen a surge in inquiries about retirement planning since the referendum. 17% say they have been contacted by clients asking for retirement planning reviews while 15% have been asked about guaranteeing funds.
The research suggests that advisers have been working hard to support clients after the result – around 60% have contacted existing clients offering reviews of their finances while 22% have asked clients to reassess their capacity for loss and to re-run risk profiling tools.
Simon Massey, wealth management director at MetLife UK, said: “The predictions of doom and disaster after the referendum vote have so far been proved wrong with the initial shock turning to a market surge, a so-called ‘Brexit bounce’.
“But, those clients nearing retirement are faced with decisions that ultimately will impact the rest of their retired lives. There’s never been a more appropriate opportunity for advisers to consider solutions that offer guarantees and the potential to lock-in current gains.
“Clearly there is real nervousness out there with advisers concerned about potential downturns and braced for market volatility ahead with most expecting a significant correction this year as the picture becomes clearer.
“Clients still want and need to invest but many are re-adjusting their attitude to risk. They are focused on guaranteeing and capturing gains while they can, while accepting that uncertainty is here to stay for the foreseeable future.”