Investors need at least £100,000 to justify using an adviser for drawdown, IFAs have said in a new survey.
Advisers said this was the average amount that would be needed to add value for retirement planning clients.
17 per cent said that clients would need more than £150,000 to justify drawdown advice, and just 8 per cent said there is no minimum pot size that would make advice on drawdown worthwhile.
The findings are part of a report by consultancy Platforum on advice in decumulation, due to be released later this week.
Platforum head of intermediary research Miranda Seath says: “Advisers have woken up to the fact that it is just not profitable to advise clients in decumulation with under £100,000. While industry commentators may be wringing their hands over a widening advice gap, we think this is sensible. Unless an advice firm is set up to offer ultra-low-cost, automated advice – and many are not – the income generated for the client is negligible and advice fees would eat away at returns.
“If advisers looking at retirement solutions are comparing the portfolio to its potential to buy an annuity, then the maths don’t add up for pots under £100,000.”
The report finds that four in five advisers have seen an increase in clients at retirement post pension-freedoms. While part of this is put down to surging defined benefit to defined contribution transfer enquiries, 40 per cent of the advisers surveyed said they did not offer a transfer service.
Higher rate tax changes are a further driver of decumulation advice demand, the report finds.