Simpler pensions favoured by advice firms
14 July 2020
Simple pension products retain their popularity among advisers, despite the growth of more complex wrappers like SIPPs, new research has shown.
According to a report by Aegon and NextWealth, 80% of advisers said they would recommend a standalone pension product for their clients’ retirement needs, particularly if a client has lower retirement wealth (45%) or requires access to specific product features (41%).
Other reasons cited by advisers include if a client doesn’t want ongoing advice (27%), a client’s pension is their only or main source of wealth (24%) and if a client has limited investment experience (22%).
Ronnie Taylor, chief distribution officer, Aegon, says: “There is a great deal of choice for advisers when it comes to selecting the best pension product for retirement clients, with many services offering complex solutions with access to a wide range of investments. For a more straightforward and simpler pension proposition that meets clients’ needs, advisers overwhelmingly recommend a standalone pension product.
“Advisers have a hugely important role to play helping individuals make appropriate financial decisions in today’s uncertain times. While SIPPs continue to be popular, standalone pension products can provide a low cost service that helps to save time, identify opportunities and demonstrate the value of advice.”
According to Taylor, the introduction of new FCA regulations around defined benefit pension transfers and the need for advisers to first consider transferring to a client’s workplace scheme may help push simpler pensions to the forefront.
Taylor adds: “The intention behind the new DB transfer regulations is to ensure individuals aren’t transferred into unnecessarily complex or costly solutions with ongoing advice when a simpler solution would have been suitable. When reviewing the pension arrangements of all types of clients, this consideration is likely to be even more at the forefront in advisers thinking.”
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