Democratising advice
When reviewing My Pension Expert’s recent research, it was striking to discover that, despite the disruption experienced by pension savers throughout the previous 12 months, just 12 per cent of Britons aged 40 and over sought independent financial advice.
Despite this worryingly low uptake, almost half (47 per cent) of the respondents want to see the government improve access to independent financial advice.
This is particularly interesting, given the Financial Conduct Authority launched its Investment Pathways – online guidance to help people approaching the pension freedom age to
decide how to best manage their pension – in February 2021.
The launch of the Investment Pathways was supposed to provide savers with a free alternative to independent financial advice, yet it has enjoyed an even lower uptake from people than independent financial advice itself – just 9 per cent of UK adults aged 40 and over have used the tool in the previous 12 months.
These findings suggest that the public are aware that independent financial advice is superior to free, generic guidance, however there are barriers to entry which are preventing access to it.
For example, there has been an inherent assumption among the public that financial advice is only for the wealthy few, and that they must have a minimum amount saved into their pension pot to warrant seeking it. This could not be further from the truth.
Advice is readily available and largely affordable, and further still, the tailored recommendations offered by regulated independent advisers can help savers to maximise their pension pot to transform their retirement outcomes.
Indeed, the lack of awareness regarding the affordability and availability of advice suggests the government and regulatory bodies are simply not doing enough to promote it.
In which case, immediate action is desperately needed.
Cross-sector effort
It must not be the sole responsibility of one party to improve public access to independent financial advice. It will require a cross-sector effort from the government, regulatory bodies, and advisers themselves.
Firstly, the government must commit resource to working with regulatory bodies to better educate savers about not just the importance of independent financial advice, but exactly how it could benefit them financially and where they can find it.
What’s more, this information should be easily accessible and actively promoted by both parties. This will help to break through assumptions that those with smaller pension pots needn’t seek advice.
Secondly, the government must work closely with the independent advisers themselves, to better communicate potential changes to pension policy over the coming years.
Doing so will help advisers to assess how such changes could impact their clients and help them to adjust existing retirement strategies which will suit their immediate needs and financial goals.
