A recent survey by comparison website money.co.uk 669 people over the age of 55 were asked if they would, or did they, pay for financial advice before making a withdrawal of their pension. Only 19% answered yes, whereas 32% did not know and 50% answered that they would not pay for advice.
Over 55s who do not obtain professional advice are likely to rush into a major financial decision without fully understanding the long-term impact or costings to their future.
Of those answering ‘no’ on the survey, most felt that they either did not need any help, it would be a waste of money or they simply could not afford it.
The survey revealed that on average, those who were willing to pay for advice were not prepared to pay any more than £253, yet it has been found that the average cost of a financial review is £500. Furthermore, setting up an income drawdown scheme for a £300,000 pension fund can cost as much as £3000. Many people, therefore, are likely to access their pensions without advice because they cannot afford the cost of financial services.
In addition to monetary concerns, some respondents answered that they felt intimidated by financial advisors, wanted to access their money quickly without any ‘hassle’. Others showed interest in free advice schemes and said they would take the free thirty minute guidance from Pension Wise instead of paying for financial advice.
Pension Wise is a free and impartial service offered by the Government to help over 55s understand their options and demystify pensions and retirement income. This does not, however, replace professional financial advice. Pension Wise won’t recommend any products or instruct someone what to do and, therefore, does not remove the inherent risk involved in a client making a decision themselves.
Moreover, despite that it is free charge, only 20% of those who would not pay said they would go to the Pension Wise guidance service instead.
It is crucial for this somewhat vulnerable age bracket to understand the importance of seeking advice to help them make the right decision with their hard earned money. Research suggests only 38% of pensioners understand the tax implications of pension pot withdrawals. Hannah Maundrell, Money.co.uk Editor in Chief, stated concern that these people were standing to lose a considerable amount of their savings to the taxes if they made a mistake.
Are people over the age of 55 more interested quickly accessing their money without the ‘hassle’ and high cost of financial advice than safeguarding their future? Does this cause concern for you with regard to your clients — do any of them refuse to pay the price for advice?
As a will writer, probate practitioner, estate planner, or other legal professional — do you offer advice on finances within your service offering, as a way to assist your clients to save money?
If you have any opinions or cases of clients refusing financial advice, please share these with us in the comment section.
