Rising costs mean that underhalf of IFAs are willing to advise clients with less than £50,000 in a pension fund, according to research from Aifa and Prudential.
A total of 44 per cent of 221 advisers who responded in the financial planning through retirement study say they would advise clients with less than £50,000 in a pension fund compared with 56 per cent in 2010.
The study also suggests there has been a rise in DIY decumulation and warns the Government that many people with less than £25,000 of assets are planning retirement without the most basic knowledge about their retirement options.
The report says people with under £25,000 of assets have a net score on knowledge of how to find the best rates of just 12 per cent while those with higher assets score around 69 per cent.
Aifa and Prudential are both now urging the Government to support measures to reduce the cost of delivering advice and remove the £150 tax-free limit for financial advice for employees to encourage companies and employees to access independent financial advice.
Aifa director general Stephen Gay says: “There are dangers in this trend towards reduced access to advice. Bad choices lead to bad outcomes, which will leave those with the smallest pension pots even more disadvantaged.”
Prudential deputy chief executive Barry O’Dwyer says: “It is very important that everyone moving towards retirement, particularly those with smaller pension savings, understands the full set of options available to them and are not excluded from the advice market.
“Our research shows that people who received financial advice secured an annuity income on average 24 per cent higher than those who did not have an adviser. This demonstrates the clear value of advice.”
Partnership director of corporate affairs Jim Boyd says: “This is an enormous matter of concern for public policy because 80 per cent of all pension funds are under £40,000. People need to be able to shop around and access advice and a lot of the time it is people with smaller pension pots who need the advice the most.”