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Waste of money and intimidating: Why retirees shun pensions advice

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Only one in five savers accessing pension freedoms are prepared to pay for advice, new research suggests.

A survey for comparison website money.co.uk of 669 people aged over 55 found that common reasons for spurning advice included not feeling advice was needed, not being able to afford it and feeling intimidated by advisers.

Of the majority of respondents who said they would not pay for advice, just 20 per cent said they would go to the Pension Wise guidance service instead.

The research found 59 per cent of those polled said they did not need advice, while 28 per cent branded advice a waste of money and 27 per cent said they could not afford to see an adviser.

Some 15 per cent of respondents said they wanted quick access to their money, so they did not want the “hassle” of seeing an adviser.

Of the women asked, one in 10 said they felt intimidated about using an adviser.

The research also suggests although savers do not want to seek advice, only 38 per cent say they fully understand the tax implications of pension pot withdrawals.

For those willing to pay for advice, retirees put the amount they would be prepared to pay at £253 on average.

Money.co.uk editor in chief Hannah Maundrell says: “Given consumers stand to lose a fair whack of their retirement savings to the taxman if they get things wrong, getting help from a decent financial adviser is likely to be worthwhile.

“Our concern is people will rush into a decision without fully researching the long-term impact or costings, simply because they need cash fast.”

The Government is carrying out a wide-ranging review into the advice market, looking into affordability issues and the availability of advice. Final proposals are expected ahead of the 2016 Budget.

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. This research is probably quite accurate, and can you really blame the respondents ?
    The reputation of financial advice and peoples attitude to taking financial advice is at present the worst its ever been, despite the hype of RDR, loss of commission, and new found professionalism….. ppfft, I think circa £1.6 billion buys a lot of bull crap !

  2. Although it would be interesting to see if they felt the same way 10 years after retirement.

  3. Actually this is rather silly research.

    If someone has reached retirement age and has up to now never used an adviser, they are hardly likely to break the habit of a lifetime.

    Those more sensible individuals who have had an adviser for years will no doubt continue to use one. Decent financial advice isn’t a one off event, offered to a particular segment as an opportunistic last minute punt to take advantage of some prevailing new financial legislation.

    Yet again it is confusing ‘advice for the masses’ with what proper Independent Financial Advice is all about. It never was mass market and the providers are still lamenting the withdrawal of the banks from the arena who flogged mountains of product without much regard to appropriateness or suitability.

  4. It does reflect the mood of the general public, although I am sure that if you asked my clients the same questions you would get a different outcome.

    The mass market does not relate to paying for advice, it has been dressed up as free for so long. Thanks to the Government and the Regulator we are heading towards a price driven market where one size fits all. Sounds familiar ( Stakeholder, auto enrolment, CAT standards )? Watch for the banks and building societies riding in like white knights to save the day for the disenfranchised consumer.

  5. Further to my post above:

    1. Most advisers (or at least the decent ones) really don’t pay much attention to these findings – as they have (obviously) clients who are happy to pay for advice and have done so long term and have paid considerably more than the paltry £250 quoted. Again obviously because they feel they have received value. (Findings actually tend to back this up). You really need to put this in context. There are over 12 Million people over pension age – that’s a bit over 20% of the population. Your figures indicate that one in five (20%) are willing to pay for advice. Let us assume that just half of these are willing to pay proper fees, thereby discounting those who would only wish to pay a pittance. Therefore you arrive at 10% of 12 million. That’s 1.2 million people. According to APFA there are about 24,000 advisers in the UK. So there are around 50 clients who are willing to pay proper fees for each adviser. They should worry! But the Government should. if they are concerned, have formulated the rules in such a way as to put financial advice on the same footing as pertains to lawyers or accountants.

    2. Please don’t forget that first and foremost these ‘freedoms’ were designed to swell the Treasury coffers. A clever political ploy makes it seem as if it is for the benefit of the participants. When these people have then to rely exclusively on the State Pension – what strain to the Exchequer then? Will there be another review by the Regulator? Most advisers are unwilling (at any price) to sign off those who wish to ‘trash the cash’ – the regulatory risk is incalculable – so those only wishing to pay peanuts won’t even get the monkeys.

    3. This whole nonsense could have been easily managed by just increasing the Triviality Rule from around £18k to £50k. and leaving everything else alone. But that wouldn’t have raised the lolly for Boy George.

    4. Most of those in draw down do pay willingly for an adviser, but these very evidently are not the people to which this research refers. I suspect those in the report are the people who wish to withdraw the whole wad.

    5. Of rather more concern – both to those who want to seriously save and to the providers of pensions is the current and continuing tinkering which in the end may well put an end to pension saving entirely – apart from the woebegone Auto Enrolment – but that is another topic entirely!

  6. Another day, another survey. Only the financial trade press seem to have this weird fetish for conducting surveys about financial advisors among people who are not in financial advisors’ target market.

    ‘Waitrose “too expensive” say 80% of Lidl shoppers’

    ‘Cricket “too boring” say two thirds of basketball fans’

    ‘”Repetitive and cacophonous” – why people are shunning thrash metal concerts, according to a survey of opera buffs’

  7. Pay, don’t pay; understand the rules, don’t understand the rules. Whatever! Just don’t moan if or when it goes badly.

    Got a problem with the cost of advice? So have I!!!

  8. As the saying goes, a fool and his money……..

  9. Harry Katz makes some very good points especially about those who do or do not take the advice of an IFA. One concern as a taxpayer is that I don’t want to subsidise the non advised complainants when it all goes wrong. Also as an IFA I also don’t want to subsidise those who receive advice from questionable advisers who having taken the money then disappear. On the other hand I am in favour of freeing up pensions provided that clients clearly understand the ramifications of their decisions.

  10. In my view, many customers were quite adequately catered for before with Small Funds and Triviality.

    Firstly, their circumstances are simpler. Secondly, the cost of advice would be a significant chunk of the policy value.

    For those with bigger funds and often more complex circumstances, advice will continue to be needed and very worthwhile.

    The IFA market needs to focus on the latter. Pensionwise and the CAB are available for those with smaller funds.

  11. A large part of peoples’ reluctance (or downright unwillingness) to pay for advice is that they have NO CONCEPT WHATSOEVER of what it actually involves, the long term implications of a short term decision or the open-ended vulnerability of the adviser. Their thinking is dominated by: It’s my money, the government says I can do what I want with it, everyone knows pensions are poor value, I just want somebody to help me get my hands on my money with minimum hassle (and cost).

    All attempts to explain why the process just isn’t that simple fall on deaf ears. They don’t want to hear it.

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