Confidence crisis: over 24 million adults expect no financial improvement in the next five years

How can advisers help to rebuild this trust?

New research* from investment, protection and retirement specialist, LV= reveals a concerning gap in financial confidence. One in five UK adults (20%) say nothing would make them feel more secure in the next year, while almost half (45%) are not confident their financial situation will improve over the next five years.

Although 38% of adults feel optimistic about being better off in five years, a larger proportion remain uncertain. Among those lacking confidence, almost a quarter (23%) cite insufficient savings or pension provision as the main reason.

The research highlights the critical role financial advisers play in improving client confidence. Those who have engaged with an adviser report significantly higher confidence in their financial future (50%), compared to individuals who have never sought professional advice (19%).

With rising living costs, knowledge gaps and speculation around tax changes, retirement planning is increasingly complex. Financial advisers are well placed to simplify this process through the development of a centralised retirement proposition, reducing complexity and improving outcomes in the approach to and during retirement.

Some clients could benefit from a multi-tax wrapper approach, which involves spreading investments across different types of accounts to increase flexibility and tax efficiency. For example, an LV= multi-tax wrapper strategy could include pensions (SIPPs), ISAs and onshore bonds, creating a diversified retirement portfolio that could lead to improved confidence. This reinforces the importance of seeking professional financial advice, as advisers can tailor strategies to individual circumstances, blending solutions for both accumulation and decumulation.

Gwen Haggo, Savings and Retirement Sales Director at LV=, said: 

“24.2 million people believe their financial situation will not improve in the next five years, a figure that truly highlights the scale of the challenge. We want to support advisers to change this narrative and demonstrate the options available to their clients.

“These findings also highlight the growing uncertainty surrounding retirement planning. Complex tax rules, market volatility and changing legislation mean that, without tailored advice, clients risk falling short of their long-term goals.

“Advisers are uniquely positioned to guide clients through these challenges, ensuring plans are robust, tax-efficient and aligned with their objectives. By blending solutions such as pensions, ISAs and onshore bonds into a multi-tax wrapper approach, financial advisers can help clients build a retirement portfolio that supports their later life plans.

“By taking a proactive approach now, clients can take steps to secure the financial future they desire.”

To access the latest retirement planning resources and tools, visit https://www.lvadviser.com/changing-retirement-needs.