Stephen Lowe, Just’s group communications director, acknowledges this assumption does hold true sometimes, “partly driven by the fact that if you’re sat down with an adviser you’ll get good advice, and perhaps people with lesser wealth don’t see an adviser, therefore perhaps don’t get access to the same quality advice”.
But he adds: “People who have a lot of money may still be people who don’t want to put a load of it at risk. Their capacity for loss, what they can afford to lose is much higher but they may still have inherent beliefs that say, I don’t want to gamble with my money.
“It’s not quite as straightforward an answer as wealth is highly correlated with risk taking.”
It is also typically the case people tend to underestimate how long they are going to live. Facing up to this fact will help retirees make the choice between an annuity and income drawdown in the first place.
As Mr Patel notes, it is important for clients to consider their own individual circumstances.
“This can be really daunting and unpleasant – it’s facing up to your own mortality in all but name – but really asking themselves the right questions can sometimes lead to better rates than they would otherwise have got. For instance, if they have a serious health condition, this can lead to a more generous rate of annuity,” he explains.
Mr Patel continues: “Whatever the final decision, it is crucial that the client takes their time and doesn’t rush into anything.
"There is myriad information out there, whether that’s through services such as Pension Wise, helpful case workers at the Citizens Advice Bureau or even close family and friends in similar circumstances who may have already gone through the process.
“In more complex cases, it could be worth enlisting the help of a financial adviser – at the very least, they will be able to help you shape any pre-conceived ideas into a sensible plan of action.”
eleanor.duncan@ft.com
