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'Rip off': bad experience puts savers off seeking advice

'Rip off': bad experience puts savers off seeking advice

A few bad apples can cause a lot of damage as bad experiences put savers off seeking advice in the long term, a survey has found.

According to Interactive Investor’s annual retirement survey, published today (October 21), a mere 4 per cent of savers regretted not seeking financial advice on their pension, with some saying they had been ‘ripped off’ in the past and others claiming there is too little ‘competition’ among firms.

Of the 12,000 people surveyed a mere quarter (26 per cent) had paid an adviser for help with their retirement finances (28 per cent men vs 23 per cent women).

Some said they had previously had bad experiences when seeking advice and thus were put off using advisers in the future.

In particular, respondents stated “rip off cost of advice”, “poor advice from IFA” and “paying for poor professional advice” as their main financial regrets.

Meanwhile, one respondent felt that some investment advisers were “only interested in large portfolios” and not able to “demonstrate their market position”.

Another respondent felt there was a need to get good, impartial and reasonable advice but that the current framework of independent financial advisers was “a licence to print money for advisers” and there was no “real competition”.

There were also concerns that obtaining advice was very difficult for low earners, particularly if old and vulnerable.

One respondent said they wanted to see a source of free independent advice for those approaching retirement on ways to mitigate care costs and navigate inheritance tax but claimed they did not want this to be led by advisers or “anyone who may have any form of vested interest”.

But Rebecca O'Connor, head of pensions and savings at Interactive Investor, cautioned the findings might be skewed as people were typically more likely to report bad experiences than good ones.

She said: “The key is for us all to have better financial education, either so we can make our own decisions, or have a better relationship with our adviser and be able to ask the right questions to help get the best outcomes.”

Tim Morris, independent financial adviser at Russell & Co, said often the issue was people do not understand the value of something until they have experienced it first-hand.

He also said the cost of advice varied from one adviser to the next so people could choose if they are willing to pay that price.

Mr Morris said: “If I’m working with a client for the long term, I’m quite happy for someone to walk away after an initial discussion. 99 per cent of the time, if we find the right fit, we will work well together for the long term and enjoy that time. 

“The emotional value is the relationship between an adviser and a client and in how they help them achieve their financial plans.”

He also said that “bad eggs” within the profession were to blame for damaging the reputation of advisers.