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Majority of savers want face-to-face pensions guidance

The majority of savers want Chancellor George Osborne’s “guidance guarantee” to be delivered face-to-face by qualified advisers, new research suggests.

To support radical pension reforms that will hand people greater freedom over how they spend their pension pot from April next year, the Government has promised everyone will have the option of receiving free face-to-face retirement guidance.

The Government has set aside £20m to get the guidance service up and running, with the FCA handed responsibility for designing the framework.

The ongoing costs will be paid through a levy on providers and trust-based pension schemes.

It remains unclear how the pledge will be delivered, with insurers divided over the role they should play in communicating with members.

The Pensions Advisory Service chief executive Michelle Cracknell has claimed most people would prefer not to speak to someone face-to-face.

However, a nationwide survey of more than 1,000 over 40s with private pensions, conducted by Consumer Intelligence, suggests 69 per cent want their options explained in a face-to-face session.

A further 24 per cent said they would be willing to use online services in conjunction with human help, while 4 per cent wanted guidance over the phone. Just 3 per cent said they would be willing to rely solely on online help.

Consumer Intelligence spokesman David Black says: “Decisions about retirement income are ones that people literally have to live with so it is clear that people want to take them seriously.

“Face to face guidance is by far the preferred option for the free advice proposed by the government with most people willing to travel to ensure they get as much help exploring their options as possible.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. goodness gracious 16th April 2014 at 1:38 pm

    This by far is the best research to come out so far. contrary to the views expressed by the industry or those with their own axe to grind, people value impartial, face to face advice tailored to their needs, just as the chancellor called it. Not calling it ‘advice’ is purely semantics, What advisers sell is ‘regulated advice’, anybody can advise on investments, rules are: do not get paid for it and be careful. The man in the pub who tells you ‘if I were you I would invest in student property, no risk and 10% interest’ is not giving guidance, but advice, however poor it may be. The survey tells us that this type of advice is not what the populace wants, but something akin to regulated advice, but, to ensure impartiality, no specific product should, be sold, but generic advice should be given. I cannot see anything wrong with someone giving guidance, then leaving a retiree a list of local IFAs in his area as well as a list of providers that sell the relevant products/services that they could access directly via the interweb.
    So it becomes increasingly more likely that the best solutions to chancellor’s plans should be implemented by a directly employed advisory workforce, probably through the PAS or the FCA, giving retirees an option of ‘at home’ service, ‘Skype’ or telephone based, however I cannot see how telephone based would work very well unless as a questions based service as a follow up to the first two options.
    Mind you, it will be expensive. If the number of retirees p.a. is about 500,000 and 6/10 own a money purchase pension, then there are about 335,000 eligible. 69% that want face to face advice means 231,000 face to face appointments per annum. At about 300 appointments per annum per adviser, this means 750 travelling advisers and about 300 telephone based need to be taken on. At, say, 40k p.a., that means a wage bill of about £5,000,000, plus support structure costing say £5 million and the costs still do not look unreasonable. Mind you, if you let our super regulators take charge it is inevitable that costs will spiral.

  2. I wonder how many of these 690 respondnts would change thier tune if they realised they would have to pay for the f2f advice as the government wont stump up the hundreds of millions required to provide it?

    Where can we see the full research?

  3. I wonder if the poll included the question: Would you pay for at retirement advice? Figures might have been very different. So we come full circle to the question of who is going to fund this ‘free’ service.

  4. goodness gracious 17th April 2014 at 12:39 pm

    Its perfectly clear. The on-going costs will be funded by a levy on pension providers. the cost to the retiree is nil. Therefore this research is perfectly valid.

  5. @ gg

    Perhaps I’m missing something but I make 750 adviser x 40k (which would have to include salary, NI, benefits, etc. which seems low) £30 million. Add the telephone support and infrastructure and you’re getting well beyond £50 million without the start-up costs and time required.

  6. @Goodness Gracious

    Apologies my comment was a bit tongue in cheek. I realise that the government has already suggested that providers will pay but they have already come out and said that additional costs will be passed onto savers. Also, this is before we get into the whole ‘advice’ v ‘guidance’ debate.

    Helpfully RDR cleared up the whole issue of hiding advice/guidance costs within charges so we don’t have to worry about the public thinking they are getting something for free that they have actually been paying for for years. Or do we………………………………………………………

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