Aifa director general Stephen Gay has urged the IFA community to back Partnership’s call for a debate on the risks facing people with small pension pots as the RDR approaches.
Last week, Partnership managing director of retirement Andrew Megson called on the Government, trade associations and financial advisers to address the problem of people with small pension pots being unable to afford independent financial advice.
He cited research which shows less than half of annuitants who have shopped around for a retirement product know what an annuity is and 75 per cent of those who chose an enhanced annuity did so because it was recommended by a financial adviser.
Gay told Money Marketing: “It is up to all of us to show leadership on this issue. Leaders step forward and say, what can we do about this? I would like to think there are enough leaders in the IFA community to take part in the debate that Partnership is suggesting and find a way through it.”
Gay also wants IFAs to better communicate the benefits of taking advice about annuities.
He says: “People who are tempted to self-serve in terms of annuity selection need to understand that an important part of the advice proposition is the transfer of risk from the client’s shoulders to the professional’s shoulders. That transfer of risk costs money.
“This is something I do not think the IFA community has communicated well enough. It is something we need to embrace and communicate to clients as an important reason to go to an independent financial adviser for help.”
Worldwide Financial Planning IFA Nick McBreen says: “Advisers have to get behind what Partnership is trying to do here. This is potentially a huge consumer detriment issue and it is only going to get worse.”