Consumers want more than ‘guidance’ at retirement and actually crave a service that is more akin to full advice, according to the findings of a new survey that shows almost a quarter want the service to include a specific recommendation on what retirement option is right for them.
A survey of more than 2,000 adults for adviser referral website Unbiased revealed that 29 per cent would prefer the guidance to include a guarantee “that what they are being told is right for them”, while 25 per cent would ideally want a general overview of the retirement options.
While these two elements are likely to be included in any guidance services, a further 24 per cent said they would like the service to include specific recommendations on which option is right for them and 18 per cent would actually want a meeting with a professional adviser at the government’s expense.
The research backs up the findings of a recent survey conducted for the National Association of Pension Funds, which found that close to a third of people wanted “face to face, independent advice” following the Budget but few are prepared to meet the cost.
Less than half, 43 per cent, said they would be prepared to contribute to the cost of guidance, with only 3 per cent saying they would pay as much as £200 and not one of the more than 2,000 respondents saying they would pay more than £500 for “face to face, independent advice”.
Unbiased said its survey supports claims that the Treasury must address consumers’ “guidance confusion” when putting together its guidance guarantee as announced in the Budget.
It comes on the back of the publication of a report by the Treasury Select Committee, which highlighted a number of limitations of the proposed plans when compared to full advice.
The Treasury Committee report states that the service which is to be offered through product providers should be set up so as to ensure it is fully impartial, must give the opportunity for face-to-face meetings as opposed to lower-cost alternatives, and must be free at the point of use.
MPs led by Andrew Tyrie also demanded that the cost of the service in savers’ premiums be openly disclosed, and that the “limitations” of the guidance be explained to savers, including specifically that it can not offer final product recommendations.
Critically, despite the service only offering information the committee also calls for retirees to be told what “protections” are in place should they believe any detriment has arisen from the service.
The committee report even criticises chancellor George Osborne for using the term “face-to-face advice” in the Budget speech, highlighting the important distinction between regulated advice and the sort of guidance being proposed.
Unbiased said its research highlights that the UK public values whole of market financial advice and the benefits it can add to their retirement planning. Around 63 per cent of consumers say that more needs to be done to help the general public find a whole of market adviser.
Karen Barrett, chief executive of Unbiased.co.uk, said: “We are at a pivotal time in UK financial services, with a real chance to tackle how consumers address their at-retirement choices once and for all. For the first time, the concept of ‘guidance’ has moved to centre stage, clearly emphasising that consumers need more support to make the right decisions for their post-retirement finances.
“Our worry, borne out by our consumer research, is that the word ‘guidance’ in the consumer’s mind actually means ‘advice’ – a distinction that the industry is very clear on, but one that is less familiar to consumers. Only whole of market advice can deliver the best outcomes, in a helpful, unbiased and accountable way – all of which are attributes consumers seek.
“We are calling on the government to be clearer about what they mean by ‘guidance’ and we will be discussing this with them in coming weeks in advance of the consultation deadline.”
Unbiased said it will be discussing the Treasury consultation in coming weeks with politicians and others.
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