Minority of savers turn to advice for retirement planning

Minority of savers turn to advice for retirement planning

Less than a quarter of savers use an adviser when looking for retirement planning as the majority prefer to go it alone, according to research.

Interactive Investor’s great retirement survey, published today (October 9), found despite pension freedoms making retirement planning more difficult, more than three quarters (76.5 per cent) of people choose to not use an adviser when looking for help with their retirement.

The platform surveyed 9,966 individuals at different stages of their retirement planning, including those new to the workforce and only beginning to enter auto-enrolment, those approaching retirement and people that have already retired.

It found that attitudes to advice differed between retired and non-retired individuals.

Of the non-retired, 81.5 per cent did not have a financial adviser, compared with 71.5 per cent of retirees.

One non-retired individual said: “I regret hiring bad financial advisers who took a percentage from my pot to move it around then don’t review holdings ever again.”

Retired people tended to have a more positive view of advice with one respondent saying that contacting an adviser before retirement was “one of the best things” they had done.

Colin Low, chartered financial planner and managing director of Kingsfleet Wealth, said the problem is people only see the need for advice when their pension pot is larger, for example the closer they are to retirement.

Mr Low said: "It is apparent that for many small pension pots there is perceived to be a limited requirement for financial advice.

"With so many pots consisting of small sums, the cost of engaging with an adviser is likely to appear prohibitive. Of course, it's only when the big picture is seen and understood that the true need for an adviser can be identified."

According to the II survey people are more likely to do their own online research when looking for retirement help with just under half (42.9 per cent) of all savers naming this as their preferred option.

Meanwhile, 29 per cent said they didn’t take any guidance or advice at all but 17.5 per cent chose to use government services such as Pension Wise.

Others relied on the financial press, got assistance from their employer or spoke to their family and friends.

Ricky Chan, chartered financial planner and director at IFS Wealth & Pensions said this was a concern as the information people access online may not always be accurate.

Mr Chan said: "It’s the sign of the times that we live in, in which Google is the first port of call for everything.

"Although it’s expected that many do their own research initially, retirement planning can be quite a complex area of advice, particularly with pensions freedom and the tax implications, so big mistakes cannot be undone.

"Quite often there is factually incorrect or outdated information online, or information is misunderstood by retirees, so it can be dangerous basing life changing decisions on that. Hence, it is slightly worrying to see many opting to go it alone."