As the government unveils its plans to crack down on legal highs, why not turn to FTAdviser for your fix of news.
Let’s find out what’s been happening this week, with the week in news.
1) The drawback of drawdown
This week the Financial Conduct Authority published a report on retirement outcomes following pension freedoms – but sadly there was no update on how Lamborgini sales had been affected.
The regulator found that accessing pension pots early has become the “new norm” for retirees with 72 per cent of pots which had been accessed were by consumers under 65.
The most popular option was to fully withdraw the pot, with 53 per cent of pots fully withdrawn between October 2015 and September 2016.
The report also found that consumers who access their pots early without taking advice typically follow the “path of least resistance”, accepting drawdown from their current provider without shopping around.
In fact more than half of fully withdrawn pots were not spent at all but were simply moved into another savings vehicle such as an Isa.
The results have led the FCA to consider a return to default retirement income strategies, saying those at retirement faced "unbelievably complex decisions".
2) Up the workers!
It’s not quite a Bolshevik revolution but the Taylor report into the labour market, published this week, included proposals on tax and pensions.
Among the proposals was that the government should explore ways to improve pension provision among the self-employed.
The report proposed a number of solutions without necessarily endorsing any one, but it was suggested that the government could auto-enrol the self-employed and administer it through the self-assessment process.
Meanwhile there should also be greater use of online tools to help people pay tax, it found, and that in the long-term the tax system should treat all forms of employment the same.
3) Mo money, mo problems
Perhaps the Financial Services Compensation Scheme will agree with the words of the Notorious B.I.G. who said “the more money we come across, the more problems we see”.
This week the FSCS revealed that claims had risen to £375m, with an increasing amount of payout relating to self-invested personal pensions.
The compensation paid to investors holding their pensions in Sipps went up by 35 per cent to £105m.
The FSCS has said this trend began two years ago and looks to be continuing, with a large number of failed life and pensions advisers.
4) Breaking news: financial advice not pointless
Financial advisers often like to talk about the benefits of the services they offer, but it seems someone has finally decided to fact-check them.
Research, published by the International Longevity Centre and Royal London, found those who received financial advice between 2001 and 2007 accumulated significantly more liquid financial assets and pension wealth than those who didn’t by 2012 to 2014.
Ultimately those who received financial advice ended up being around £40,000 better off than those who didn’t.
5) Is your business robo-proof?
The highest-margin part of the financial advice business is safe from being carried out by automated services because customers value the personal touch most in these areas, a global survey has suggested.
Figures from international investment house Legg Mason suggested the move towards automation is not striking a chord with customers, with the ‘pure advice ‘components of financial planning being the ones where the most people favour personal customer service.
These include creating a comprehensive financial plan, where 64 per cent thought human participation was beneficial, buying a pension, where 61 per cent thought it was beneficial, and looking to reduce a tax bill, where 58 per cent felt personal was better.
damian.fantato@ft.com
