CompaniesDec 1 2015

Size isn’t everything when it comes to need for advice

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The gap between what customers believe they need to have saved before seeking advice, and the amount advisers believe to be worthwhile is “significant” according to experts.

Duncan Jarrett, managing director, retail at Aegon UK, said: “There is a significant gap between what consumers believe they need to have saved before they seek advice and the amount advisers believe is required to make advice worthwhile.

“The government’s consultation on methods of extending advice needs to look at ways of reframing consumer thinking. When people understand that the cost is potentially securing them a much more comfortable retirement or removing a major worry then the value becomes apparent.”

The identification of the gap comes following research conducted in September by Aegon UK.

In a survey of 2,000, data show that the average consumer felt that a pension pot of £121,000 was the ideal amount to start paying for financial advice. Only 6 per cent of those questioned agreed with the £30,000 pot size recommended by financial advisers.

Adviser view

Ian Lowes, managing director of Tyne and Wear-based Lowes Financial Management, said: “This is clearly an education issue. If consumers don’t feel that they have need for financial advice until they reach £121,000, then this is clearly a failure of the market.

“I would say that someone who gets financial advice when they have £60,000 is much more financially aware than someone who waits until they have £120,000. It also worries me that up to this point people may be engaging in self-directed investment without the appropriate advice and knowledge.”