As a millennial, or someone that identifies as one, I’m not different from others – I live in rental accommodation, I spend way too much money on takeaways, and – what a shock – I’m not great when it comes to savings.
I decided to have a look at the different options my current pension provider has in terms of funds I can invest in, and I was overwhelmed by the long list of options in front of me.
To be honest – and I write about this stuff everyday – I didn’t even understand the difference between the default funds I could choose from, let along what where the charges of the XYZ fund that invests in Japanese equities or something strange like that.
I decided to put my money where my mouth is or, so to speak, and get financial advice.
I was able to explain what I wanted – to have a more tailored asset allocation for my pension investments – according to my profile and my beliefs, as environment is something that I’m passionate about, and I want my pension to reflect that.
Yes, I was told that I’m not saving enough for the retirement I want to have. Yes, I was told I need to have a rainy day fund and that I need to “start paying myself first”.
But I wouldn’t be able to do any of this – which had the cost of £600 – if my current pension provider didn’t allow me to use the advice allowance.
If I don’t have a rainy day fund or savings – I blame my need for travelling for that – how would I be able to pay for advice?
This allowance was introduced in 2017 and allows defined contribution pension scheme members to withdraw £500 a year tax-free from their pot, up to three times in their life, to pay for financial advice.
It was a central initiative of the Financial Advice Market Review - orchestrated by the Financial Conduct Authority and HM Treasury - designed to help more people get access to advice who may not have been able to afford to pay for it from their disposable income.
In January, the FCA said the advice allowance is clearly signposted on factsheets included in ‘wake-up’ packs sent to all consumers aged 55 plus.
My financial adviser told me that I was one of his first clients to use it. The provider in question has told me previously that there’s not enough take up of this option.
Other providers – who don’t offer the allowance – say that adviser charging works as well as the advice allowance, which is why they don’t offer it.
I’m sorry to say that I disagree. The advice I took was a one-off. I’m not interested in having ongoing advice. Frankly, I don’t think anyone in their 30s with only a DC pot will need continuous advice.
So, what’s the choice for people like me?