Why Is It Essential to Get Reliable Pensions Advice?
The new pension freedoms given to savers by George Osborne have shaken up the industry.
Following spring’s historic change in pension law, demand for advice has increased. But a BBC Watchdog Special aired recently has thrown light on worries that this demand has affected service levels from pension providers.
This comes hot on the heels of June’s pension industry report, where pension providers were found too slow to adapt to the new legislation and upgrade their systems, meaning thousands were unable to enact their new legal rights to access their pension savings.
In this article, we will explain the issues impeding savers looking for quality, accessible advice, and highlight the importance of seeking out quality advice from a qualified pension advisor like gpfm.
Good Advice Is Worth Paying For….
The main criticism of the pension advice industry is that of overpricing its services.
The Guardian reported that hourly fees for financial advice ranged from £58 to £350. Citing a Which? report, Patrick Collinson wrote that the cost of independent advice on a £100,000 pension pot could be up to £3,750.
Fees paid have to be viewed in conjunction with potential tax savings, along with product and industry knowledge. Doing it yourself and getting it wrong could prove very costly.
What’s Wrong with Paying For Advice?
The criticisms that have been made of the industry on the back of these findings are unfounded.
The most straightforward complaint is that on a personal level, many low-income earners who have worked hard and saved diligently all their lives could be losing large amounts of their savings simply because they want to do ‘the right thing’ but by not seeking advice, they could lose out by making the wrong choice.
If the Government’s reforms are to fulfil any potential of a positive effect on UK pensioners, they rely on the pension advice industry to give sound guidance. Only if savers are guided to the right options upon taking their pensions will they see the full benefits of their new freedoms.
People are intimidated by the pension industry’s seemingly endless jargon. Often, these people are those whose small savings mean their welfare, and are in most danger of suffering if badly advised (or not advised at all).
Phrases like “UCIS” and “Defined Benefit Schemes” (which we concisely explain in the two previous hyperlinks) are unnecessarily confusing ways of talking about ideas which in reality are intuitive and simple. It is this inaccessibility which somewhat mystifies the whole business of being advised on pensions, and puts off the very people who need advice the most.
Speaking to Watchdog, Fergus Muirhead, said “the pension industry seem to revel in using complex language and that has to change. They have to make it easier for their customers to understand.” Here at gpfm, it is our job to decipher this jargon and break it down into plain English for our clients to comprehend.
Are Robots the Future?
Given the faults and failings of pension providers, it should be no surprise that one pension provider, LV=, is turning to automated “robo” advisors to give impartial guidance at a mere £199 per customer. Not only is this cheap, it takes around 40 minutes to assess one customer: much faster than the human alternative.
So is automated advice the future? There are certainly big problems to contend with. One large concern is that automated, script-based guidance could lead to a ‘one size fits all’ mentality but everyone’s circumstances are different. Therefore paying for advice is essential.
Our Hertfordshire financial advisors are highly trained and experienced, offering advice you can trust with a personalised, friendly service. So rather than deal with this minefield yourself, discuss your retirement plans with an expert today, email firstname.lastname@example.org or call us on 01992 500 261 now.
This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. Investments can go down as well as up and you may get back less than you invested.