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ADVISERS PREDICT CONTINUED RISE IN PENSION FREEDOM ENQUIRIES AND AVERAGE PORTFOLIO SIZE

ADVISERS PREDICT CONTINUED RISE IN PENSION FREEDOM ENQUIRIES AND AVERAGE PORTFOLIO SIZE

The overwhelming majority (80%) of advisers have seen an increase in new business enquiries as a result of the government’s pension freedoms and 68% expect to see the number continuing to grow over the next five years, according to new research1 commissioned by Investec Wealth & Investment (“IW&I”).

Three quarters (73%) of advisers predict an increase in the average portfolio size held by clients seeking pension freedoms-related advice.

Of these, a fifth (22%) forecast the average portfolio will grow to more than £50,000, a third (34%) to more than £100,000 and 7% to in excess of £250,000. Just 17% of advisers are expecting a fall in the average portfolio size.

According to the research, a key source of new business resulting from the pension freedoms has been Defined Benefit (DB) to Defined Contribution (DC) transfers with 68% of intermediaries having received enquiries from pension savers seeking guidance on this issue.

On average, advisers predict they will continue to receive DB to DC transfer enquiries from consumers for a further nine years, generating a substantial long-term new business opportunity.

Mark Stevens, Head of Intermediary Services, Investec Wealth & Investment, said: “Advisers have seen strong levels of demand among pension savers as a result of the pension freedom reforms, many of which have involved guidance around DB to DC transfers.  Our research suggests there is little sign of this new business stream slowing down any time soon.

“Advisers who have had to turn away numerous enquiries from savers whose pension pots have been too small to service profitably will be the first to agree that it’s not the quantity that matters but the quality.  In this regard, the research paints an encouraging picture with the majority of intermediaries predicting that average portfolios will increase in size over the coming years.

“Given the complexities involved in providing retirement planning advice in a volatile and fast changing investment climate, many IFAs have become increasingly reliant on the support of an experienced discretionary investment manager.”

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