A recent survey has found that confidence in retirement plans among advisers and retirees fell sharply between March and October 2022. The decline in confidence was most strongly felt by advisers, suggesting a gap in expectations between finance professionals and their clients.

Realistic goals and strong communication are key to making sure that financial plans are attainable. Regular reviews can spot potential shortfalls early and allow advisers to make timely changes to keep their clients’ plans on track.

Keep reading for a look at the widening gap between client expectation and reality, and how expert financial advice can help to bridge it.

Only a quarter of advisers believe their clients’ retirement plans are attainable

The twice-yearly report, published by FTAdviser, looks at adviser and investor expectations in March and October.

The most recent figures (for October 2022) show that only 25% of advisers felt that the majority of their clients would meet their retirement goals. This marked a drop from 34% in March.

Global events and political unrest at home led to a turbulent year for stock markets. The cost of living crisis tightened purse strings further. And yet, while this has led to a more conservative financial outlook from advisers, the change among clients was less pronounced.

The survey found that investor confidence fell between March and October, but importantly, the fall in confidence was less significant. It dropped from 78% to 72%, remaining much higher than that of their advisers.

This suggests a widening of the gap between expectation and reality. It also highlights the need for clear communication and transparency in retirement planning.

Non-advised investors are likely to be more pessimistic after a difficult 2022

The FTAdviser-published survey also looked at the different views held by advised and non-advised investors.

When asked in March and October 2022 about the prospect of a rise in equities during the next year:

• 61% of advised investors were confident in March
• Just 40% of advised investors were confident by October.

This compares to:

• 48% of non-advised investors who were confident in March
• Just 30% of non-advised investors who were confident in October 2022.

Among surveyed advisers, 62% expected a net rise over the next 12 months.

The outlook of advised clients was much more in line with that of financial advisers, showing greater confidence in the markets and, by extension, in their ability to meet their goals.

Realistic retirement goals are key to successful financial planning

We all have a vague idea of what we want our retirement to look like, however far away that day may be. After decades of hard work, it’s understandable to expect that our retirements will be comfortable, maybe even more than comfortable.

Which? recently looked at the income a household would need in retirement to cover the essentials or to live a comfortable or luxurious lifestyle.

Source: Which?

The research found that a two-person household would need a combined retirement income of £45,000 a year to live a luxurious lifestyle.

“Luxurious” was classed as covering basic expenditure, elements of a comfortable lifestyle – like European holidays, hobbies, and meals out – and luxuries like long-haul trips and a new car every five years.

Giving a client the opportunity to think about their dream retirement is the first step to creating a plan.

Knowing when and how a client wants to retire allows us to understand how much their dream lifestyle will cost. We can then put a plan in place to get that client to their goal. Regular reviews will help to keep that plan on track.

Professional financial advice is especially important in turbulent times

At Boolers, our understanding of the markets is based on decades of combined experience. We know that the best investments are those aligned with a long-term goal and that remaining patient when the markets are turbulent is the best way to achieve success.

The UK economy has been struggling to bounce back since the coronavirus pandemic. The war in Ukraine has caused further uncertainty in the last 11 months.

With inflation set to remain high, at least for the first half of 2023, and the cost of borrowing likely to increase further, short-term volatility in the markets is to be expected.

Advised clients who seek help from their adviser are more likely to remain optimistic and focused during these difficult times. They are also likely to have a greater understanding of what is realistic while ensuring their plans align with their long-term goals.

Get in touch

If you have clients who would benefit from financial advice to help them achieve their goals, please get in touch. Email enquiries@boolers.co.uk or call 0116 240 7070.

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.