Boom in popularity of advice following pension freedoms
Pension freedoms allow anyone aged 55 and over unfettered access to their pots. Since the rules came into effect in April 2015, savers are increasingly looking for financial advice.
The research from Aegon revealed that three quarters (76%) of advisers expect an increase in clients in the coming year, with a quarter (28%) having to hire more staff to meet demand.
As savers now have to shoulder more responsibility for securing their own financial well-being, more than half of advisers (53%) report the greatest demand for advice is from people with a final salary pension. They need help weighing up the option of giving up a secure income for life in return for more choice and flexibility over how and when to take the proceeds.
The advisers also reported that later life care is another significant motivator for people to seek advice. The number of people in care is predicted to double by 2035, and a recent report from the Centre for the Modern Family (CMF) revealed that this cost of this is being underestimated by £7bn.
Given the UK’s ageing population, around one in five (21%) advisers report that helping clients with social care funding is likely to become increasingly important.
However, with the launch of the pensions dashboard set for 2019, a quarter of advisers expect consumers to engage more activel in their retirement planning as they will be able to view all of their pension pots in one place online.
Advisers also expect to see a rise in demand for robo-advice in the next 12 months.
Steven Cameron, pensions director at Aegon UK, said: “People face more and more choices over their long and short-term savings options, and initiatives like pension freedoms have had a positive effect on how engaged people are with retirement planning.
“But with choice comes complexity and people want to be sure they are doing what’s best for their financial futures, while trying to avoid the confusion that comes with frequent changes to pension rules.
“Bearing that in mind, it’s hugely encouraging to see that consumers recognise the big decisions they make now affect their finances in later years and are increasingly turning to financial advisers for their expertise and advice. The benefit of financial advice can’t be underestimated.”
A recent report by the International Longevity Centre revealed that the benefit of advice could result in a £40,000 boost in wealth compared to people who didn’t seek financial advice, which Cameron said was a “very powerful figure, illustrating the value advice can have for individuals”.
He added: “In our increasingly complex market and with a climate of political and economic uncertainty, it’s imperative people seek professional financial advice whenever making significant and life-altering decisions to ensure they are financially secure in their retirement.”
See YourMoney.com’s Looking for financial advice? Key points to consider for more information.