Almost half of advisers say clients have withdrawn funds to plug financial shortfall amid cost-of-living crisis

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• Close to half (46%) of financial adviser’s report clients withdrawing funds to cover essential bills and address immediate income shortfalls
• 35% of advisers have seen clients deviating from previously set plans by withdrawing money
• Standard Life highlights the role financial advisers play in increasingly complex economic landscape

As the UK’s economic outlook remains uncertain and the cost of living crisis persists, financial advisers are seeing significant changes in their clients’ behaviours, with many withdrawing funds to plug the shortfall or opting for a more cautious approach to their finances, according to a recent survey by AKG, sponsored by Standard Life¹.

Close to half (46%) of financial advisers have noticed clients withdrawing more funds to cover essential bills and address immediate income shortfalls. Even those who may not be immediately struggling have still reassessed their approach: over a third (35%) of advisers have seen clients deviating from previously set plans by withdrawing money.

Clients are increasingly cautious

Furthermore, over a third (36%) of advisers have noticed clients taking out money to establish ‘rainy day funds’, as the economic uncertainty and strain of the last few years prompts individuals to plan and save more against unforeseen emergencies and financial shocks.

The uncertainty in the economic landscape has influenced investment decisions as well, with 3 in 10 (29%) advisers seeing clients choosing to shift their investments towards lower-risk options to mitigate potential market volatility.

Commenting on the findings, Chris Hudson, Retail Advised Managing Director at Standard Life, part of Phoenix Group said: “The economic backdrop is having a stark impact on people’s finances, causing many to reassess their plans. There’s a lot to contend with – from sky high mortgages, rising interest on debts and ever changes tax rules – and it’s important to factor all of this into financial planning. In this increasingly complex environment, financial advisers have a crucial role to play in navigating their clients through it all and helping them withstand the turbulence as best possible. This will give peace of mind to clients, as well as hopefully help them weather the financial storm.”

Matt Ward, Communications Director at AKG, added: “We simply cannot get away from the conversation about the seismic impact of the past few years on UK consumers, nor should we. What has been experienced needs to be acknowledged and understood by the financial services industry so that a positive future can be built upon from here. And whilst not all of this will make such positive reading it should help to plot a path through vulnerable customer and Consumer Duty development strategies, as well as enabling advisers to prove how helpful they can be.”

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Notes to Editors

¹ Pureprofile surveyed 100 advisers in February 2023 on behalf of AKG, with findings featured in AKG’s vulnerable customers and financial wellbeing themed research paper (issued on 24 May 2023).

About Standard Life

• Standard Life is a brand that has been trusted to look after peoples' life savings for nearly 200 years
• Today it proudly serves millions of customers who come to Standard Life directly, through advisers and through their employer' pension scheme.
• Standard Life is part of the Phoenix Group, the largest long-term savings and retirement business in the UK. We're proud to be building on nearly 200 years of Standard Life heritage together
• Our products include a variety of Pensions, Bonds and Retirement options to suit people’s needs, helping our customers to invest and save for their future. We’re proud to offer a leading range of sustainable and responsible investment options.
• We support our customers on their journey to and through retirement with comprehensive, easy-to-understand guidance so they can invest in the right way for their needs, and plan a future they feel confident about.
• The value of investments can go down as well as up, and may be worth less than originally invested.

About AKG

AKG is an independent organisation, which has specialised in the provision of assessment, ratings, information and market assistance to the financial services industry for over 30 years.