OpinionApr 24 2015

Live online guidance shows way forward for Pension Wise

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Live online guidance shows way forward for Pension Wise
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This week Unbiased launched Moneyfit week, which allows the general public to email in financial questions during a live Q&A to a panel of financial advisers. Guidance, of course; nothing more.

I’ve been keeping an eye on the daily afternoon sessions and, somewhat unsurprisingly, pensions dominate the live feed.

While it is great to see pensions becoming a ‘normal’ discussion, the live Q&A sessions highlight how little people know and how desperately they need financial advice. At an assumed cost of between £750-£1,200 for an adviser, many simply will not go for full advice.

Many of the questions revolved around the new pension freedoms, but some went even more ‘basic’ by asking, for example, what is an annuity.

Due to the lack of financial education in this country - soon to change I hope - this is the basic information that some people need, but in an interactive environment where they can ask further questions to build on their understanding. I have been impressed.

In fact, a lot of the issues we write about daily on FTAdviser were mentioned.

In one case an ‘insistent’ client even got involved and asked of a DB transfer: “So is there any way I can insist it be transferred to a pension which includes a cash lump sum? Some financial advisors want more than £2,000 just to sign a piece of paper. Then Standard Life will want £500 just to transfer it.”

(Note the consumer does not realise that financial advisers will do more than sign the piece of paper!)

In another case, accessing ad-hoc lump sums without crystallising the pension - the person even used the acronym UFPLS - was raised, though they seemed not to know that the FCA had told providers to treat this as drawdown, which is why some are insisting on advice.

Another asked about the other major debate topic of whether they could or should use their pension pot to fund a buy-to-let investment. To this the adviser pointed out the tax implications of using a pension to purchase a buy-to-let, of which many will be unaware.

Charges were also a popular topic, including charges to use the new pension freedoms; whether cash components should be AMC-free; how fund profits can be calculated; and what options there are to complain about a firm.

You get the point. People are confused and want help: general guidance in these cases can suffice, and these open forums, enabling people to ask anonymous questions without a major time investment are clearly helpful. It is also a good way to advocate for further advice being taken.

The general set-up of Pension Wise is useful, but having a service like this alongside the more formal ‘face-to-face’ or telephone session would be a real benefit.

donia.o’loughlin@ft.com