Pension Freedom 

Surge in IFAs hiring to meet pension transfer advice demand

Surge in IFAs hiring to meet pension transfer advice demand

More than half (53 per cent) of advisers expect further increased demand from consumers for advice on pension transfers, research from Aegon shows.

The survey, which polled 252 financial advisers, shows that the greatest demand for advice is coming from those with a ‘final salary’ pension.

These individuals are seeking professional help to weigh up the option of giving up a secure income for life, in return for more choice and flexibility over how and when to take the proceeds.

Overall, Aegon’s research identifies a boom in popularity of advice, with three quarters (76 per cent) of professionals expecting an increase in clients in the coming year.

A quarter of advisers (28 per cent) will have to hire more staff to meet demand.

According to Steven Cameron, pensions director at Aegon UK, “people face more and more choices over their long and short term savings options”.

He said: “Initiatives like pension freedoms have had a positive effect on how engaged people are with retirement planning.

“But with choice comes complexity, and people want to be sure they are doing what is best for their financial futures, while trying to avoid the confusion that comes with frequent changes to pension rules.”

Mr Cameron added that it is “hugely encouraging to see that consumers recognise the big decisions they make now affect their finances in later years,” and are increasingly turning to financial advisers for their expertise and advice.

Later life care is also expected to be a significant motivator for talking with an adviser, with the number of people in care predicted to double by 2035.

A report from the Centre for the Modern Family (CMF) published in August indicated that the cost of care is being underestimated by as much as £7bn.

Around one in five (21 per cent) of the polled advisers report that helping clients with social care funding is likely to become increasingly important.

The pension dashboard, which will enable consumers to see an overview of all of their pension pots together online, is also expected to increase the rush for advice.

A quarter of respondents (26 per cent) expect that having access to this information in one place will prompt more consumers to actively engage in their retirement planning, and take advantage of the experience and insight on offer in the advice sector.

The increase in digital engagement is also expected to prompt higher demand for robo-advice, with 31 per cent of advisers predicting interest in it to increase in the next 12 months.

Gem Durham, independent financial adviser at Obsidian, said: "We have been very busy particularly with pension enquiries.

"I think it is down to a number of factors, pension freedoms of course being the biggest influence but also long-term poor annuity rates.”

Also, the “packs at retirement sent out by life offices now very explicitly advise customers that an annuity on the open market is available, and that this could provide them with a higher income,” she added.

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