Advice allowance fails to fulfill promise

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Advice allowance fails to fulfill promise

He said: "While demand is still fairly limited, we have noted that where adviser charging is not available there is growing awareness of the allowance and we are now reviewing whether to make this available.

"The downside of allowance compared to adviser charging is it is limited to £500 on up to three occasions. We would like to see the limit increased to £750.

"While adviser charging is not subject to limits, it can only be used to pay for advice solely in connection with the pension plan.

"Ideally, we would like to see current adviser charging rules relaxed to allow it to pay for broader retirement advice, removing current complexities and representing the best of both worlds."

Martin Bamford, chartered financial planner with Informed Choice, said: "It is not an allowance we have had cause to use since its introduction.

"Our work is primarily financial planning led, so considering a client's overall financial situations and goals, rather than providing retirement income advice in isolation.

"In any case, the fees we charge for financial planning are upwards of £5,000, so a £500 tax-free allowance, if facilitated by a provider, would only make a very small contribution towards this total cost.

"I think regulators and policy setters need to get real about the level of fees for financial advice. The rising burden of regulatory costs combined with very high costs for running a financial planning business mean that a £500 allowance is in no way reflective of the reality of what it costs to provide regulated advice."