Confidence, pot size and cost are main barriers to asking for retirement planning advice
- Around one third of people (32%) who’ve accessed their pensions (and are over 55) are currently using a financial adviser for help with financial planning
- Of those who didn’t seek advice, 44% said they knew what they were doing before accessing their pensions
- One in four (26%) said they didn’t think their pension pot was big enough to warrant financial advice
- Perceived cost also put off 22% of pension freedomers from seeking advice before acting
New research from Canada Life, among consumers aged 55+ who have accessed their pensions show they have low levels of engagement with financial advisers, with just one in three people (32%) seeking advice before flexibly accessing their pension.
Key reasons cited for not using an adviser included confidence in knowing what they were doing (44%). Men (53%) are more confident in making a decision without an adviser than women (31%). The size of the pension also has a role to play in deciding whether to consider advice, with one in four people (26%) saying their pension pot wasn’t big enough, while 22% of respondents were also put off by the cost of advice. Trust is also a barrier with one in five people (20%) not seeking advice due to trust issues. Men are less trusting than women (25% compared to 12%) on this issue.
Pension Wise (now part of the Money and Pensions Service) was mentioned by 20% of people as a source of advice, while online resources played a much less important role than perhaps the common perception, at 6%.
The research also reveals that those who use a financial adviser are twice as likely to withdraw a cash lump sum and buy an annuity with the balance of their pension compared to those who didn’t get advice - 37% compared to 18%.
Andrew Tully, Technical Director at Canada Life, said:
“A significant majority of people exercising their pension freedoms have turned their back on financial advice. We’ve exposed some pretty entrenched views on the value of financial advice, but many people are seemingly making complex decisions and potentially irreversible financial decisions unaided.
“I’d like to turn the debate on its head. Rather than talk about the cost of advice, we should instead promote the idea that people can’t afford not to get advice. It can often be just as cost effective, or even better value paying for advice, than not.
“Advice is much more likely to create better consumer outcomes than trying to go it alone with a DIY retirement.”