There has been a "major reduction" in the availability of defined benefit (DB) transfer advice, analysis from Aegon and Next Wealth has found, revealing a 59 per cent drop in the number of advisers offering DB advice since 2018.

The annual Managing Lifetime Wealth: retirement planning in the UK report found that less than a quarter (23 per cent) of advisers still offer DB advice, compared to 56 per cent of advisers when the research was first published in 2018.

The research suggested that the market could also be set to shrink further, as looking ahead, only 14 per cent of respondents expected to remain in this market at their current level.

The report showed that the way most advisers set withdrawal rates for clients in drawdown has been another area of major change.

In particular, the analysis showed that whilst 66 per cent of advisers used a fixed rate or range to determine a safe withdrawal rate in 2018, with most opting for the 4 per cent rule, the latest findings showed that only 29 per cent use a fixed rate or range now.

Instead, more advisers (52 per cent) are now opting to use cash flow modelling or scenario modelling.

Other areas, however, have seen less change than expected, as the research noted that whilst the use of Centralised Retirement Propositions (CRPs), a common and consistent approach to retirement advice that is followed by the whole firm, was expected to grow as advisers continued to enhance how they deliver financial planning advice, this has not been the case.

Indeed, according to the research, 46 per cent of financial advisers had a CRP, and a further 13 per cent said they would have a CRP in place in the following twelve months, suggesting 59 per cent having one by the end of 2019. Yet in 2023, this figure is still only 52 per cent.

Commenting on the findings, Aegon pensions director, Steven Cameron, stated: “In times of such constant change, it’s hugely valuable to be able to look back over the last five years and see how the combination of unpredicted worldwide events, coupled with regulatory change, have influenced retirement advice.

“The macro-economic world we live in is also highly volatile, highlighting the huge value of retirement advice to help clients understand choices, adapt investment strategies and/or sustain incomes throughout retirement.

“The single biggest change has been the major reduction in availability of DB transfer advice, prompted by the increased business risk of undertaking this advice, as well as the changes that the FCA has introduced over recent years.

“With interest rates still rising, schemes are offering lower transfer values than a year ago, which is likely to mean a lower supply will be matched by lower demand. But it’s hard to predict what the position will be five years from now.

“Coming a close second, is the approach to determining safe drawdown withdrawal rates. The top objective in 2023 for clients is to use savings to provide a sustainable lifetime income while preserving all or part of the capital.

“The increased use of cash flow or scenario modelling to identify a safe withdrawal rate means that advisers have been able to add further value to clients working towards this objective – advisers can better assess whether against an uncertain future investment world, clients should be able to meet their income requirements without running out of money with this approach.

“It will be fascinating to see what another five years brings in the retirement advice market. Personally, I predict a developing market incorporating social care funding into retirement advice and that Consumer Duty will further demonstrate how valuable retirement advice is. Whatever happens, we’ll no doubt see the need for retirement advice continue to grow.”

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