Prominent financial planner Julie Lord has used a speech at the Personal Finance Society’s Festival of Financial Planning to warn that, without financial education, the pension freedoms will end up hurting consumers and the advice community.
Lord, who sits on the PFS’s practicioner panel and chairs Prestwood’s board, said “the bomb has already gone off” for pension freedoms, but this will leave many retirees vulnerable.
She said: “Its like lettering children loose in a sweet shop. They just want their money…there’s not real understanding of long term planning or long term investment.
“They don’t know anything about sequencing risk, asset allocation or safe drawdown rates.
“For people who don’t know the rules, the freedoms has been absolutely designed to screw them.”
Lord likened insistent clients, those who demand a course of action against recommendation, to “little kids having a tantrum”.
She said: “As professionals, we know this is self-sabotage.”
Lord issued a called to the financial planning profession to do more to improve financial education, for example through articles on their websites, blogs or through social media posts, on the back of fears that, though some clients may have been given bad advice since the freedoms, all planners will be “tarred with the same brush”.
She said: “We live in a culture of claims. Can you imagine in two years, all those people bothering us about payment protection insurance, will say did you transfer your pension, did you take out drawdown.
“I think we have got a really big responsibility here that the clients are getting the best possible advice, but not just clients, its getting the people who think they know better, who can’t afford advice, or don’t want to engage with the advice community, to understand what the rules are.”