Less than two thirds (60 per cent) of professional investors feel they are either fully or almost fully financially prepared to help their clients in living for longer in retirement, research by Fidelity International has revealed.

However, the research, which included responses from institutional investors and intermediary distributors across Europe and Asia, found that 40 per cent of respondents felt there was a lack of readiness to support clients in this area.

Fidelity International global head of client solutions, Katie Roberts said that while the global retirement challenge and pension funding gap are not “new”, these issues have continued to accelerate “significantly”, as populations are expected to live longer, and to some extent, be healthier and more active in retirement.

“While the retirement challenge requires local solutions, what is clear is that state support overall is likely to be less going forward, with individuals becoming increasingly responsible for financing their retirement,” she continued.

“To generate enough capital to support this extended life span, professional investors have a key role to play in providing their clients with relevant long-term solutions, whether it be through workplace investing or customised, private solutions to prepare for retirement and ensure their clients continue to be invested in retirement.”

When the respondents were asked if there are currently enough products and solutions in the market to address the needs of an increasing life expectancy, 57 per cent of professional investors said there were.

However, Fidelity International said that while the majority of respondents are comfortable with the number of solutions available, its findings highlighted the need to further develop the product and solution range geared towards longevity challenges.

Roberts also suggested that despite the majority believing there are enough products and solutions available in the market, there is an opportunity to further develop “innovative financial solutions to alleviate any provision gaps”.

In terms of asset allocation, over half (55 per cent) of investors confirmed they expected to increase their exposure to equity, 52 per cent confirmed they expected to increase private assets and 24 per cent said they would increase fixed income.

However, the analysis also pointed out a potential decrease in exposure to multi-asset funds (28 per cent), cash (26 per cent), and fixed income (21 per cent).

“Interestingly, the findings suggest that when planning for retirement, investors are focused on increasing their allocation to more risk-on asset classes to accumulate wealth over time,” Roberts added.

“What this may not show is how the portfolio allocation changes when clients transition from a wealth accumulation phase to a decumulation phase in retirement.

“Indeed, in retirement, one might consider products that provide more accessible and flexible liquidity.”

She suggested that preparing for retirement remains “complex”, particularly when considering the changing market environment, local specificities including regulation, pensions policy, and frameworks, or the age of retirement.

In addition to this, Roberts also said that investors must consider the difference between investing for retirement and investing in retirement, which involves ensuring “sufficient” funding throughout the entire extended life cycle.

Roberts said from an investment perspective and according to the survey, a lot of progress has been made in terms of retirement readiness but emphasised: “more still needs to be done”.

In particular, she said more needed to be done regarding awareness of longevity, the transition between accumulation and decumulation phases, and the availability and diversity of solutions.

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