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The Actuary The magazine of the Institute & Faculty of Actuaries

Brexit investment advice boom anticipated

Two out of three retirement advisers in the UK expect Brexit-related advice to increase this year as uncertainty over the EU exit process creates investment risk, according to research from MetLife.

Brexit good for advisers ©iStock
Brexit good for advisers ©iStock

It shows that, despite being good for business, Brexit is considered the biggest challenge for investment planning, ahead of general volatility, and the short-term impact of European elections this year.

In addition, it reveals that advisors are increasingly concerned about the risk posed to clients who rely on traditional drawdown income, with three out of four fearing the uncertainty will hit those customers.

MetLife UK intermediary development manager, Richard Evans, said: “Equity markets have been buoyant since the EU Referendum result with the FTSE-100 up more than 16% since 23 June.

“However, the formal triggering of Article 50 means the Brexit process is now real, with the clock ticking on the UK’s departure from the EU, which potentially heightens sensitivity to the twists and turns of negotiations.

“Advisers are clearly concerned that clients in traditional drawdown are exposed to volatility and uncertainty, and believe Brexit is as much of a risk as longevity.”

The research involved a survey of 206 specialist retirement advisers earlier this year, finding that 68% are optimistic about business in 2017, with half urging clients to open Brexit-proof individual savings accounts.

“The market boom since the referendum has benefited clients but it may now be time to look at guaranteed solutions as a way to protect those gains,” Evans added.

These findings come after research from Prudential last week showed that 84% of financial advisors believe the implications of Brexit pose a threat to five-year investment returns.

This is in comparison to 66% who have concerns about potential market falls, as a result of them being overvalued, and 55% with worries about low long-term interest rates.

“Brexit is overshadowing all other investment planning issues and highlighting the need for solutions that can provide protection and the possibility of strong returns,” Prudential investment expert, Vince Smith-Hughes, said.

“The triggering of Article 50 will provide some certainty for financial planning but will continue to highlight the need for solutions and advice which can support individuals in achieving their investment goals in the short-to-medium term.”

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