Solution Approach. From inflation surprise to structural opportunity

Financial Advisory

24 November 2022

Advisory DistributorsFinancial adviserFinancial AdvisoryGoals-based planningInflationInsightsTrends

Expert: Nicholas Bratt - Lazard Facilitator: Ben Wright


  1. Trends show that we are at the end of the present era of low inflation and higher inflation is here to stay for the foreseeable future
  2. Historic inflation averages out at 7%, which is what we should expect.
  3. Advisers must urgently review the assumptions they use in financial planning tools or there’s a real danger of clients not achieving their objectives due to underestimated inflationary effects


Demographics are driving inflation – we’re running out of people (labour force), which is causing upwards pressure on prices. These are structural issues as it’s hard to create new labour quickly!

We’re on the brink of the next Cold War – this time between China and USA. China is now friend-shoring (giving deals to friendly countries rather than the best country for the job). The likelihood for this conflict is to escalate, which will contribute towards price rises in the west.

Because of covid, there has been a move from “just in time” to “just in case” supply chains, which decreases efficiency but is required to ensure clients can remain serviced in case of disruptions (covid, Brexit, etc)

Advisers need to review the assumptions they are using in tools - most advisers are still using 2% inflation in their assumptions! Using the last 10 years as an average isn’t an accurate measure for what’s to come. There’s a danger of clients not achieving their goals based on the continuing higher rate of inflation.

Key takeaways:

  • Advisers must review the assumptions they use in financial planning tools NOW!
  • The last 10 years isn’t an accurate predictor of the future