Punter Southall Aspire has launched a new guide stressing the importance of regulated financial advice to help people plan for complex retirement solutions such as drawdown and access the best investment products.
The guide coincides with research from the Association of British Insurers published in June, which found that many people were entering drawdown without taking any financial advice.
With the average drawdown pension pot now at a high of £120,000, a third of retirees entered drawdown for the first time between April and September 2018, but 34% did so without receiving any advice.
Peter Selby, managing director, retail advice, Punter Southall Aspire, said: “In our experience, many people are in the dark about the tax implications of drawdown and this lack of knowledge can cost them dearly in terms of unwanted taxation and poor investment choices.
“Since Pension Freedoms were introduced in April 2015 there has been a huge dash for cash. If people are doing this without seeking any regulated financial advice, they may not fully understand what options are open to them or have considered whether they should take out an annuity or how to invest their funds appropriately.”
A recent survey from Zurich amongst people who had unlocked their savings since the introduction of pension freedoms in 2015 found that half (52%) of over-55s taking an income in drawdown didn’t know they could reduce their withdrawals, and more than half (56%) were unaware they could stop them, despite flexible income being a key perk of drawdown.
The new guide focuses on the value of support and guidance across a range of financial issues, including the transfer of estate, taxation, pensions, succession planning and investments.
It highlights research from The International Longevity Centre that showed that good quality financial advice has a monetary value. This research looked at an ‘affluent but advised’ group who accumulated on average £12,363 (or 17%) more in liquid financial assets than the affluent and non-advised group, and £30,882 (or 16%) more in pension wealth (total £43,245).
Selby added: “Often the barrier to seeking advice is the fact it costs money, but it could be invaluable and cost less than making a financial mistake. Generally, the charges come out of the investment product, so people can usually afford the costs and taking regulated advice is likely to bring about a better retirement outcome.”
To download Punter Southall Aspire’s new guide click here: Value of Financial Advice guide.
