Almost two thirds (62%) of the over 50s say they would be unlikely to take advantage of the suggestion from a recent government proposal to allow people to use their pension savings to pay for advice, according to new research from Retirement Advantage1.
The research also finds that people who are not planning to use a financial adviser are put off by the cost of advice (38%) and the extent to which they can trust advisers (38%).
This new insight comes as the industry is beginning to question whether the £500 proposed allowance is actually going to be sufficient to pay for a comprehensive look at people’s pensions.
Andrew Tully, pensions technical director at Retirement Advantage, said: ‘While it sounds like a good idea to let people use their pension savings to pay for advice, it appears not only are people unlikely to take up the offer, but £500 won’t actually go that far.
‘Cost is clearly still a big issue when you ask people what the barriers are to seeking advice, alongside trust. On a positive note it is good to see government supporting advice and recognising the real value in people getting help and advice at retirement. The trick will now be to create a market which can service a wider range of consumers cost-effectively and also evidence the value of the advice being provided.’
The research also shows that the most common sources for financial advice among the over 50s are the internet (43%), financial advisers (43%) and the Government’s Pension Wise service (38%).
Andrew Tully added: ‘The internet is clearly a force to be reckoned with as consumers self-direct or simply use it to check facts and figures. What we’ve found from speaking to consumers is that many are using a combination of web research and professional advice. Far from posing a challenge, we could be on the brink of creating a real opportunity for advisers who are digital-savvy.’
1. Research was conducted by YouGov Plc. Quantitative fieldwork conducted between 24 and 30 March 2016, surveying 1000 UK adults aged 50+ who have a DC pension and who are not in retirement.
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