Some 51% of UK advisers have adjusted client portfolios to be more defensive because of concerns over recent geopolitical volatility, according to Schroders UK Financial Adviser Pulse survey.
Of the 212 respondents, 28% had increased cash holdings while 44% were looking at assets like gold, active ETF’s or LTAFs.
This comes amid a backdrop of increased bearishness, with 65% of advisers now expecting higher inflation over the next five years, while 39% reported more cautious clients.
Nearly a quarter of UK advisers (23%) have boosted their allocations to active managers in response to market volatility.
Some 19% said they had slightly increased their active allocations, while 4% said they had significantly increased theirs. By contrast, just 9% had increased their allocation to passive over this timeframe, the research found. Meanwhile, 64% opted to make no material change.
Jamie Fowler, head of UK wealth at Schroders, said: “This year’s Pulse Survey captures a clear focus from advisers on building resilience into client portfolios as they respond to higher volatility, while highlighting the power of active management in navigating more complex markets.”
The report also found that tax was a growing concern for clients, with 16% identifying it as their primary concern. The idea that pensions could become subject to inheritance tax was a “near universal” (99%) concern for clients, with over half describing themselves as very concerned.
“The level of client concern around tax and estate planning reinforces the importance of advice and the value it brings in supporting long-term financial planning and providing peace of mind,” Fowler added.
This push for tax and estate planning was expected to be a growth driver for the advisers, with 83% expecting to grow their client base over the next year.
More than 40% of advisers were exploring tech-enabled solutions, with just 8% of advisers now saying AI was a threat to their business, the lowest level since the survey began.
See also: Schroders: Advisers up alternatives exposure as volatility concerns persist
That said, advisers did see some barriers to growth, particularly among smaller clients.
Almost nine in ten respondents said that regulatory and cost pressures made it harder to serve their smaller clients, with more than a quarter admitting that they were segmenting and off-boarding clients as a result.
