A third of clients more risk averse post-pandemic

• A third (33%) of advised individuals want less investment risk than they did before the UK went into lockdown.
• However, a quarter (27%) said they want more risk, with both groups citing capacity for loss as a contributing factor.
• Half (50%) of those that are happy to take on more risk also cited greater confidence in the advice they receive.

The coronavirus pandemic has made a third of people that receive financial advice more risk averse, as capacity for loss becomes a bigger factor in investment decisions, according to new research from abrdn.

A third (33%) of 1,000 advised individuals polled by abrdn said they now want to take less risk with their investments than they did before the UK first entered lockdown in March 2020.

When asked why their risk appetite was lower, half (51%) pointed to a change in their investment or financial priorities and two in five (42%) cited a reduced capacity to absorb loss.

This compares to just over a quarter (27%) of advised individuals who now want to take on greater investment risk. Half (50%) of this group said they are happy with more risk because they feel more confident in the advice they receive, while more than two fifths (42%) said their capacity for loss had increased.

Alastair Black, Head of Industry Change at abrdn, said: “Seismic events like Covid-19 can cause big shifts in investor risk appetite. However, the divide we’ve identified between those who now want less risk and those who want more is considerably more significant than we expected. It confirms the uneven financial impact of the pandemic, and the challenge advisers are currently facing to support clients with very different outlooks.

“The research also underlines the link between capacity for loss and investment risk, and how the former is having an even a bigger effect on client decision making in the wake of the pandemic. This comes almost five years after the FCA said advisers must consider capacity for loss during suitability assessments, both separately from, and in addition to, attitude to investment risk.

“Looking ahead, it’s encouraging to see those that are happy to take on more risk cite confidence in their adviser. This shows how invaluable advice has been during such a turbulent financial period, and the value advisers will continue to deliver as clients shape their portfolios as the UK’s enters a new phase of its post-pandemic recovery.”

ENDS

Media enquiries

For further information, contact:

Calum Anderson
E: Calum.Anderson@citypress.co.uk
T: 0131 460 7922

Patricia Corrigan
E: Patricia.Corrigan@abrdn.com
T: 0791 782 2874

Methodology

Research of 1,001 UK adults who have a financial adviser that they speak to at least once every year.

Fieldwork was carried out by Sapio in September 2021.

Notes to Editors

At abrdn, we empower our clients to plan, save and invest for their futures.

We structure our business into three areas – and together they reflect our focus on enabling our clients to be better investors:

Investments: We work with clients to create solutions across markets, asset classes and investment strategies – combining our global network of investment professionals with research, data and technology.

Adviser: We offer market-leading platform technology and tools that enable UK wealth managers and financial advisers to look after the diverse needs of their clients.

Personal: We help people throughout the UK plan for their financial futures – through our financial planning business and our digital investing services.

Through the expertise, insight and innovation of our team, we aim to help clients create more ways for money to make an impact. We set our sights on giving them more confidence to achieve their goals, and more clarity about what they need next. And we focus on delivering outcomes that are more than just financial – by investing sustainably to build a better world.

We’re a global business. We manage and administer £532 billion of assets for our clients, and we have over 1 million shareholders. (Figures as of 30 June 2021)

abrdn is the single global brand for all areas of our business. abrdn.com

The value of investments and the income from them can go down as well as up and investors may get back less than the amount invested.