One bad experience with an adviser can cause savers to see taking advice as one of their biggest financial regrets and dissuade them from ever seeking advice again, a survey has shown.
According to Interactive Investor’s annual retirement survey, published today (October 13), the number of people asking for advice had not changed from last year, despite the pandemic.
Of the 10,000 people surveyed just a quarter (27 per cent) of retired people had either paid or were paying a financial adviser for help planning their retirement.
There was not much change when it came to non-retired savers, of which only 23 per cent had seen an adviser.
When asking savers about their financial regrets, Interactive Investor found some mentioned taking advice due to a bad experience and so were put off from using an adviser.
Several respondents claimed they had received bad pension advice in the past.
This included being told to transfer out of a final salary scheme to a personal pension or not taking enough risk with their investments.
In particular, respondents stated “hefty fees”, “poor IFA advice” and “being given terrible financial advice as a young man” as their main financial regrets.
Meanwhile, one respondent felt the adviser was “more concerned with selling me a product” than understanding their long term goals, advising accordingly and building a long term relationship.
Another said their decision was driven by a lack of trust in financial advisers, saying they had never received advice of any real value.
However, one respondent’s biggest regret was not taking advice when transferring out of his defined benefit pension back in 1989 and another said the lack of financial advice available on the market was a worry.
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.
In the report, Interactive Investor stated: “We are acutely aware that as a platform for DIY investors, these comments could be seen as convenient to highlight.
“We tried to find positive verbatims around financial advice in the interest of balance, but it seems that many of us are perhaps more inclined to comment on poor experiences, rather than positive ones.
“It could also reflect our research sample, which will have a higher than average proportion of confident, self-directing investors.”
Elsewhere, the survey found more people were doing their own financial research online.
Two thirds (65 per cent) of respondents said they did their own online research, a significant increase on last year’s survey, potentially highlighting the extra time available to some during lockdowns, according to Interactive Investor.
In addition, 13 per cent of both retired and non-retired had not taken any advice or guidance and two fifths (43 per cent non-retired vs 42 per cent retired) had got help by reading the financial press.
According to the survey, people often made the point that more education on pensions was needed from an early age.
One said that “awareness of pension management should be taught at school age now that a move away from final salary schemes has been made.”
While another person believed children at school should be taught financial planning and made aware of “various tools to understand how the stock market has a bearing on savings in pensions and Isas”.
Research from Royal London from earlier this year (June), found many people don’t seek out advice on their finances for a range of reasons.
By far the biggest reason was the belief that it’s too expensive with 47 per cent of people who hadn’t taken advice citing this as the main barrier, despite 40 per cent of those having no expectation as to what an adviser might charge.
Meanwhile, 15 per cent of non-advised customers simply said that it ‘wasn’t for someone like me’, primarily because they believed their finances were too simple or that advice was only for wealthier people.
Almost one in three (29 per cent) non-advised customers felt they couldn’t trust a financial adviser, or they didn’t know how to find a good one.
amy.austin@ft.com
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