As the cost of living crisis continues to be a concern, advisers say those of their clients who are close to retiring and with more in savings are also supporting their children and grandchildren, as they feel an obligation to support the next generation.
Those who are employed are more concerned with their employers making cut backs, and so are looking for ways to take on more hours to make ends meet.
Dominic James Murray, chief executive of Cameron James, says: “The emotional strain caused by financial uncertainties is profound. For the employed, job security concerns loom large, while the self-employed grapple with market volatility and inconsistent income streams.”
The self-employed are also seeing their incomes reduce. Many individuals are reducing the amount of ‘nicer’ things that they are undertaking and therefore not engaging with much above the essentials.
Kirsty Anderson, pensions specialist at M&G Wealth, says: “We’re all affected by the cost of living situation and we know that people are worried about paying their bills and mortgages.
"As a result some people are facing a trade-off, resulting in them reducing how much they save or are dipping into savings they already have, either to help their own situation or that of other family members.
“The concern of course is how long this can continue before negatively impacting savings and plans for the future? Is it sustainable long term?”
Consumer behaviours changing
The result of all this financial uncertainty is causing savers to respond in different ways.
Anderson says some anecdotal research carried out by M&G is indicating that consumers want to ‘protect’ what they have saved, which does not necessarily mean they want a ‘guarantee’, but they do not want to experience extreme market volatility.
She adds: “We all saw that some non-advised clients in a default or lifestyle fund, for example, saw their pension values drop significantly due to the extreme market volatility of fixed interest as well as equities. Clients don’t want to experience that again.
"With advised clients, in many cases they haven’t been affected in this way but they’re hearing about it and reading about it. Advisers are telling us that they have had challenging conversations at annual reviews due to market volatility and they are receiving an increase in calls with client concerns in this area."
For some advisers they have not seen a huge change in savers’ attitude to risk: conservative investors are still conservative by nature and adventurous investors are still adventurous.
James Murray says the risk profiling should only form one part of the client's investment decisions as capacity for loss is arguably more important.
He adds: “A saver may well have an adventurous outlook, but if they cannot afford to take that risk, they should not. Conversely, many clients have a conservative risk profile, but should really be taking far more equity risk inside their portfolios due to their high capacity for loss.”
Additionally, while there is typically always a large difference in the attitudes of those close to retiring and those who are further away and at the beginning of their pension savings, James Murray says he often challenges clients on this point.
