Where will you turn for financial advice?
Advice is a crucial element of financial planning, and choosing how to receive it is one of the most important decisions a person will make. This is especially true for retirement, when a certain amount of money needs to sustain a person's lifestyle for possibly decades. It's crucial not just to seek advice at all, but to ensure it is delivered by an independent professional adviser. Despite the importance of financial planning though, many people turn to unregulated options.
Earlier research has shown that people are more likely to turn to Google, relatives and friends than financial advisers, although likelihood to talk to a professional increases with age. YouGov's Understanding Pensions and Retirement 2014 found that 20% of the participants had consulted an IFA about retirement planning, and the same percentage had spoken to friends and family for advice - although it is unknown if those who spoke to friends and family did so instead of talking to an IFA, or if some spoke to both. A further 20% had not spoken to anyone for retirement advice, but almost all of them were interested in doing so at some point.
There has been a lot of talk this year about the government providing free guidance to retirees from April 2015, to help people make the most appropriate decision with their pension fund. However, only 5% of the respondents had already made use of government services, such as the Money Advice Service, which indicates that much more work needs to be done to show people the importance - and value - of such outlets. The good news is that the lack of engagement does not seem to be because of poor quality advice, as 71% of the people who used the service thought it was either "good" or "very good".
It's possible that the media coverage around free guidance and a marketing campaign by the government will encourage more people to use the free services, though. Another YouGov report, Pensions and Investments 2013: Retirement Planning and Gender, found that people prefer not to pay for advice - so a free service could be particularly appealing, even though guidance is not individually tailored like advice is.
The numbers are actually quite stark - just 8% of people who are actively paying into a pension scheme have paid for financial advice, while 22% had spoken to friends or family and 28% consulted the financial pages of magazines and newspapers. Even within the group most likely to pay for advice - ABC1 men - only 11% actually did so.
The following graph shows where people find information about retirement saving by gender and socio-economic group:
Of people who were interested in saving for retirement, only TV and adverts by pension providers ranked lower than professional advisers who charged for consultations.
There is a clear change in attitudes as people get older though, with the over 55s more likely to talk to a fee-charging adviser and less likely to have avoided all forms of financial advice than any other age group. Those aged 25-44 are much more likely to speak to friends and family or to have not found out about retirement saving, while the 45-54-year-olds tend to have turned to financial pages and other sources of information.
It's encouraging to see regulated advice become more popular with age, but it needs to be emphasised that the earlier people seek it, the more effective their planning is likely to be. Waiting until a few years before retiring makes it very difficult to improve the fund size.
Where do you turn for financial advice? Let us know with a comment below.
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The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section: https://www.portafina.co.uk/whats-new
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