Apfa is urging policymakers and pension providers to do more to explain the costs and benefits of taking regulated financial advice at retirement.
In its response to the FCA’s retirement income market study the adviser trade body calls for a consumer awareness drive to improve understanding of the intermediary market.
Independent research conducted by NMG Consulting on behalf of Apfa found that two-thirds of advisers charge a percentage of the pension pot, with an average adviser charge of 2 per cent.
A further 28 per cent charge a flat fee, with the average being £681.
Apfa argues this would be “a price worth paying” for many consumers because it could help them get a better retirement income deal. It also says there is a danger savers will opt to use a non-advised broker because they believe the service is “free”.
Apfa director general Chris Hannant says: “We think if consumers were made aware of these costs and the wider benefits of seeking advice, many would consider it worthwhile. It also needs to be easier for consumers to find an adviser.
“For example, their product provider could send them a list of firms who advise on retirement matters in their area as their retirement date approaches.
“If more is done to explain the value of retirement advice to consumers, and to de-mystify the comparative costs of the different options, many would benefit as a result.”
The FCA’s thematic review of annuities, published last month, found that 80 per cent of people who don’t shop around for an annuity could get a better deal if they did.
The regulator has now started a 12-month market study, including an investigation of providers’ sales and retention teams.