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Investors seek lower-risk solutions as volatility persists

09/02/2026

Our latest research paints a nuanced picture of financial confidence across the UK. Only 38% of UK adults say they are confident that they or their household will be better off financially in five years’ time, while a larger proportion (45%) are not confident about their future financial prospects.

This lack of confidence is particularly pronounced among certain groups: 50% of Generation Xers (those aged 45-60) and almost 60% of Boomers (61-79) stated they were ‘not confident’.

Influences on decision-making

The research reveals that economic uncertainty and market volatility are now the dominant forces shaping financial decisions.

To what extent do each of the following
influence your day-to-day financial
decision-making? 		Gen X (45–60) Boomers (61–79) Silent Generation (80+)
Economic uncertainty
(e.g., inflation, interest rates) 		70% 67% 63%
Political instability
(e.g., elections, government policy changes) 		58% 57% 57%
Global geopolitical events
(e.g., wars, international tensions) 		55% 51% 49%
Stock market volatility 45% 40% 36%

 

Economic uncertainty had the strongest influence on day-to-day decision making across the age groups, followed by political instability. Stock market volatility has the steepest age drop-off indicating markets weigh more on Gen X’s day-to-day choices than on older consumers. This age group are crucial to support as they are heading into their later accumulation years and decisions taken now can have an impact on their retirement.
 
Faced with these pressures, these consumers are not standing still. 6% of Gen X moved money to cash or low-risk accounts, 3% sold some investments and 3% changed or paused investment in the past 12 months.
 
Smoothed funds: meeting the need for stability
 
In this climate, where clients are looking to take volatility off the table, LV’s suite of five smoothed funds (spanning pension, bond, and ISA solutions, both on and off platform) offer advisers a compelling solution to support their clients.
 
With risk ratings ranging from Defaqto 2 to 6, these funds provide a practical way to reduce exposure to market volatility while reaping the benefits of investment.
 
The lowest risk-rated fund, Extra Cautious, offers a route to investment for very cautious clients who might be drawn to cash for comfort.
 
Even the highest risk-rated fund in the range, Growth Plus, demonstrates low volatility against the comparable sector (ABI Mixed Investment 40-85% Shares) thanks to the effect of LV's robust smoothing mechanism. Ideal for those who once embraced higher-risk strategies but now seek greater stability, LV's smoothed funds present a compelling solution to help clients invest with confidence.


To learn more about how our funds have performed historically visit our Adviser Investment Centre.

Source of all statistics quoted: LV= Wealth and Wellbeing 21, 2025.

Smoothed Managed Funds are a stock market related investment that can rise and fall in value. This means your client is not certain to make a profit and could get back less than they invested.

Although it’s unlikely, we may, at our discretion, need to suspend the smoothing mechanism to protect our members and our business.

This could be required if the underlying daily fund price was less than 80% of the value of the smoothed price, or in other exceptional circumstances.

In the rare event we do need to take this step, the fund would typically be valued on the underlying price or, at our discretion, on a daily gradual averaged price (except ISA which would be valued on the underlying price) until smoothing is reintroduced.