A new study suggests that the traditional retirement client base many financial advisers rely on has shrunk by 25% over the past 10 years and may continue to decline.

The report by Canada Life, ‘Financially Mature and Stress Free’ suggests that the traditional ‘comfortably retired’ retirement planning client base many advisers target may be in steady decline with changes accelerated by the recent pandemic.

The study forecasts growth in new types of clients including those with more complex needs and those who have accrued wealth later in life.

The report says the ‘journey’ through retirement is changing and over 50% of people are no longer retiring in the “usual way.”

The study says: “Retirees today predominantly targeted and catered for by financial advisers are growing smaller as a customer group. 

“Classed as ‘Financially mature and stress free’, this customer group, which used to represent almost a third of the market, has already contracted by 25% since 2010 and now accounts for around one-fifth of the over 60s market today. This trend is expected to continue over the next 15 years.”

The company says retirees in this group can be categorised as having “very comfortable levels of wealth and health” built up over a lifetime thanks to good fortune in employment and steady family life. 

However, societal changes - such as fewer people having defined benefit pensions and the declining prospect of home ownership - mean the numbers of ‘comfortable’ retirees with significant wealth is falling.

The study found that a decade ago almost a third of those in their 60s and 70s were in this ‘Financially mature and stress free’ category, according to research carried out by Canada Life in conjunction with strategic trends forecasting agency Trajectory Partnership. 

Today these retirees currently make up only around 21% of the retirement market but many financial advisers have built their business models to cater for this ‘well off’ group, says the report.

This trend is likely to continue in the future, says the report, with two emerging retirement groups set to dominate the retirement market over the next 15 years: 

Complex Families, Complex Finances (expected to be the largest group of retirees by 2035, as divorce, second marriages, step children, and the need to support ageing parents all impact their finances) 

Late Financial Bloomers (a small but fast-growing group who will get married, buy property, have children and build financial stability later in life, condensing the time they have to build wealth for retirement)

Sean Christian, MD of Canada Life’s wealth management division, said: “As an industry we have already witnessed a significant shift in client profiles over the last decade and this trend is only going to accelerate. 

“We need to continue to understand these changes as we work to better support advisers to help these emerging groups of retirees who will dominate the market in the coming years. Advisers are perfectly placed to balance the needs of clients today and consider how the more complex retirement journeys of the future will shift how they support and guide a future generation of clients.”

Paul Flatters, co-founder and CEO, Trajectory, said: “Just 10 years ago, the largest group of retirees would have fitted into the ‘Financially Mature and Stress Free’ category, but social norms are changing and disrupting the retirement market. Accelerated by the events of 2020, unemployment rates will continue encouraging ‘boomerang’ children to return to the family home, while divorce rates, second marriages and the likelihood of needing to pay for elderly parents’ care costs are all on the rise. 

“Coupled with the fact that participation in defined benefit pension schemes is declining and we have a generation of renters facing the prospect of never owning their own property, all of which is impacting the declining dominance of these retirees.”  

• Trajectory is a ‘strategic futures consultancy’. Research drew on a range of data sources and analyses including several studies and ONS surveys (such as The Wealth and Assets Survey and ONS Consumer Trends). It also analysed data from the UK's Understanding Society Surveys (the longitudinal survey run by The University of Essex) to identify later life trends. This was supported by research among 2,000 UK adults, in August and September conducted by Opinium Research.