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Retirees opting out of ongoing advice once they take income, research suggests

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Retirees are increasingly less likely to seek ongoing advice once they start drawing down income from their pension, new research suggests.

Recent FCA showed that around than two thirds of consumers entering into drawdown sought regulated advice.

Follow-up research from Zurich and YouGov has now found that proportion drops over time taking income.

The poll, which surveyed 660 UK adults with pensions in drawdown showed, that fifty-four per cent of respondants sought either paid advice or guidance, with 42 per cent getting ongoing paid financial advice, and further 12 per cent getting guidance from the likes of Pension Wise or their provider.

Thirty-nine per cent of people got neither paid advice nor guidance.

Fewer than two in five people in drawdown and actually taking income from their pension after accessing their 25 per cent tax free cash were getting an ongoing advice.

More men than women take advice (44 per cent compared to 37 per cent).

The greatest concentration of people taking advantage of paid advice was in North-East region with half of the people opting for it, while the lowest concentration of people getting ongoing advice is in Wales, where only 27 per cent opted for the service.

The survey also showed that the bigger the household, the less the probability that a retiree will pay for advice, with 41 per cent of people living alone taking ongoing financial advice, and only 17 per cent of those living in a six-strong household doing so.

Zurich head of retail platform strategy Alistair Wilson says: “Savers appear to be seeking regulated advice before putting their pension into drawdown, but when it comes to getting ongoing advice on managing their pot, there is a sharp decline in numbers.

“Our previous research has found many consumers underestimate the risks and complexities of managing drawdown, which could help to explain the drop-off in ongoing advice.”

FCA’s Bailey: Pension freedoms are the right course to follow

Wilson notes that this might be shortsighted, however.

He says: “Recent stock market volatility gave consumers a taste of the potential pitfalls awaiting consumers who don’t get advice or guidance in drawdown, and may jolt some into action.

“With more and more people relying on drawdown in retirement, we need to understand whether the number of consumers getting advice or guidance is growing, and how engaged they remain with these sources. The FCA should consider addressing this blind spot by tracking these trends as part of its regular data gathering.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. What these data indicate are that far too many people simply can’t be bothered to get to grips with how DrawDown works and the risks it poses. Instead, they prefer to view it as some sort of magic mechanism by which a quart can be extracted from a pint pot and that, once set up, it can be left just to coast along on auto-pilot without periodic reviews.

    And, quite probably, many such people may well have health issues but are so blindly prejudiced against annuities that they aren’t prepared even to consider an underwritten one that could provide them with a risk-free, totally secure income perhaps 50% higher than would be safe to draw down from their fund.

    Oh well, you can lead a horse to water…

  2. Christopher Petrie 9th November 2018 at 9:26 pm

    It’s regarded in the Polling industry that the bare minimum of people in a census is 1,000 – hence the often used 1,002 respondents.

    Not only does this “data” fall well short of that number, it’s then compared with a survey from a completely different source.

    I suggest the whole information is irrelevant.

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