Retirement planning advice costs might dissuade people from seeking sound financial advice. This could make them vulnerable to mis-selling.
Money Minder, an investments and pensions IFA, published new research outlining how people feel about their pensions.
Pensions a source of worry
The research focussed on those in pre-retirement. It revealed that three-fifths of people were worried about how they would cope financially in retirement. Around half of respondents said they had no idea what actions to take with their pension choices. The study included people aged between 55 and 67.
Most refuse to pay for retirement planning advice
Most worryingly, the majority of people said they would not pay for retirement planning advice. The refusal to pay for advice could put people at risk of making the wrong decisions. They are also at risk of being mis-sold financial products.
Money Minder’s research highlighted what appears to be a fearful attitude surrounding pensions and retirement.
When it comes to retirement planning, people seem to be deterred by not only the cost of seeking advice. They are also put off by the difficulty of planning it personally.
Poor financial decisions being made
The Financial Conduct Authority (FCA) revealed that many people are making mistakes when it comes to their pensions. In their recent Retirement Outcome Review final report, they said that too many people are making poor financial decisions by taking some of their pension pot in cash.
The blame, according to Trade Union Congress (TUC), lies at the door of pension providers.
Tim Sharp, TUC pensions officer, said: “The report reveals a retirement income market that often overcharges and confuses people. We need a clampdown on rip-off charges.”
The FCA report concluded that someone who wants to draw from their pot over a 20-year period could increase their expected annual income by more than two-thirds (37%) by investing in a mix of assets rather than just cash.
The study also said that 94 percent of people accepted drawdown offers from their providers, even though this acted against their best interest. This came after they accessed their pension pots without taking any proper advice.
We represent many clients who have been persuaded to invest their pension pots into unregulated investments by unscrupulous advisors. If you’re worried that this might have happened to you, get in touch with our experienced team of solicitors to talk about your options.