There has been a “major reduction” in the availability of defined benefit (DB) transfer advice, analysis from Aegon and Next Wealth has found.

Research revealed a 59% drop in the number of advisers offering DB advice since 2018.

The annual Managing Lifetime Wealth: retirement planning in the UK report found that less than a quarter (23%) of advisers still offer DB advice, compared to 56% of advisers when the research was first published in 2018.

According to the research, the market could also be set to shrink further, as looking ahead, only 14% of respondents expected to remain in this market at their current level.

The report showed that the way most advisers set withdrawal rates for clients in drawdown has been another area of major change.

In particular, the analysis showed that whilst 66% of advisers used a fixed rate or range to determine a safe withdrawal rate in 2018, with most opting for the 4% rule, the latest findings showed that only 29% use a fixed rate or range now.

Instead, more advisers (52%) are now opting to use cash flow modelling or scenario modelling.

Other areas, however, have seen less change than expected, as the research noted that whilst the use of Centralised Retirement Propositions (CRPs), a common and consistent approach to retirement advice that is followed by the whole firm, was expected to grow as advisers continued to enhance how they deliver financial planning advice, this has not been the case.

The research revealed that 46% of financial advisers had a CRP, and a further 13% said they would have a CRP in place in the following 12 months, suggesting 59% having one by the end of 2019. Yet in 2023, this figure is still only 52%.

Aegon pensions director, Steven Cameron, commented: “In times of such constant change, it’s hugely valuable to be able to look back over the last five years and see how the combination of unpredicted worldwide events, coupled with regulatory change, have influenced retirement advice.

“The macro-economic world we live in is also highly volatile, highlighting the huge value of retirement advice to help clients understand choices, adapt investment strategies and/or sustain incomes throughout retirement.

“The single biggest change has been the major reduction in availability of DB transfer advice, prompted by the increased business risk of undertaking this advice, as well as the changes that the FCA has introduced over recent years.

“With interest rates still rising, schemes are offering lower transfer values than a year ago, which is likely to mean a lower supply will be matched by lower demand. But it’s hard to predict what the position will be five years from now.”

Cameron added: “It will be fascinating to see what another five years brings in the retirement advice market. Personally, I predict a developing market incorporating social care funding into retirement advice and that Consumer Duty will further demonstrate how valuable retirement advice is. Whatever happens, we’ll no doubt see the need for retirement advice continue to grow.”


This article first appeared on our sister title, Pensions Age.

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