The impending pension changes could raise client expectations beyond realistic levels, David Hughes, managing director of JFM, has warned.
Mr Hughes, managing director of the pension investment management firm, said the reforms, which come into force on 6 April, could create fresh challenges for advisers because of client attitudes. He said: “Advisers must manage expectations while ensuring their clients can take full advantage of the new freedoms available to them. Amid growing demand for income drawdown, advisers will also be required to offer a seamless path into new flexi-access products.”
Advisers would need suitable products in order to meet client demands, said Mr Hughes, particularly in the area of income drawdown.
He added: “A big challenge for advisers is finding drawdown products that are able to grow and deliver income for clients throughout retirement. They must also be flexible, since customer priorities can shift over time.”
He also said giving savers the power to take lump sums from their fund while it remained invested could potentially deplete funds too quickly.
Daniel Smethurst, director of Greater Manchester-based JonSimon Financial Advice, said: “It is going to be a bit of an educational piece in terms of what clients should expect from the pensions freedoms.”