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‘Simplification’ is set to boost need for advice

The pension simplification programme will increase the need for independent advice rather than reduce it, said experts at the Pensions Management Institute spring conference.

The panellists at the conference’s question-time session were Scottish Equit- able pension development director Stewart Ritchie and Hargreaves Lansdown head of pension research Tom McPhail and both predicted that the need for independent advice will surge after A-Day.

Ritchie said new flexibility could end up giving consumers enough rope to hang themselves with, indicating the need for professional advice, but he also said that mass-market practicalities mean that many people reach retirement with small money pots, making professional advice uneconomical.

McPhail said that A-Day will not make things simpler for consumers so the need for advice will grow, not lessen. He called for the exercising of the open market option on annuities to become the norm rather than a minority decision. He recognised Ritchie’s concerns about whether this could be a waste of time for some IFAs but said increased use of technology could streamline the process and make it profitable.

McPhail said: “A-Day is great but it is a questionable judgement as to whether it will actually simplify anything at all.”

Ritchie said: “The ideal is face-to-face advice but that is not always economically practical. We have to look at other ways, such as advice in the workplace.”

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