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One-third back compulsory advice on drawdown

More than a third of Money Marketing readers think that consumers should be forced to take advice before going into drawdown.

In a recent poll on the Money Marketing website, readers were asked whether they thought drawdown advice should be compulsory.

38 per cent responded that it should. 57 per cent said drawdown customers should not have to seek advice and 5 per cent were unsure.

Leading figures in the pensions industry including Royal London boss Phil Loney and eVestor founder Anthony Morrow have suggested that the risks and complexities of drawdown mean that it is only suitable for advised clients.

Others, including Labour MP Peter Dowd, have said that advice on other areas such as the Lifetime Isa should be made compulsory.

However, the majority of advisers believe that it is not profitable to service drawdown clients with pots of less than 100,000, according to a recent study by consultancy Platforum.

Profile: Evestor on why non-advised drawdown is a scandal waiting to happen

At present, advice is only compulsory when looking to transfer safeguarded benefits above £30,000.

Its its most recent Business Plan, the FCA announced it would launch a major review of non-advised drawdown sales to see if companies had communicated properly with clients.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. So, the government, quite rightly, gives people the freedom to do what they want with their own pension savings – but a third of advisers clearly think that people cannot be trusted with their own money and ought to be forced to pay them for advice! Bizarre! Taking advice might well be a sensible course of action but surely it has to be up to the customer to make their own choice?

  2. Providers of massively overpriced advice want it to be made compulsory. Shock!
    How’s about electricians demand an annual house wiring check to be made compulsory at just £1800.00, or plumbers demand an annual plumbing check at just £2000. Grow Up!

    • If you’re letting a property an annual gas safety check is a legal requirement, so is an MOT on any car older than 3 years.
      I don’t want to advise people who don’t want to discuss my advice, so this isn’t me touting for business, but there is an argument for a discussion with Pensionwise being mandatory for funds to go in to drawdown so that the consuemr can at least have sufficient information before deciding whetehr to pay for advice or not.

  3. My point, in compulsion lies price controls!

  4. I also disagree with the blanket claim that drawdown advice is only viable at £100k. This ignores the fact that you may have a wealthy client with non-pension assets and a small drawdown pot; it may be spouse of a wealthy client; or it might be a client who has a large DB pension as part of an overall FP service.

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