Mistrust, not cost, the biggest turn-off for seeking professional advice

New survey exposes the extent of consumer vulnerability, misunderstanding and mistrust around retirement planning and provision 

A new survey conducted by a fintech provider EValue has exposed the extent of consumer vulnerability when it comes to retirement planning and provision. It’s also underpinned by misunderstandings about pension pots and income options, and a mistrust of professional advice. As 690 of the 1,000 respondents are aged 55 or over – the age at which they can start drawing down on their pension savings – the clock is ticking.

Concerns putting people off accessing impartial professional retirement planning advice

• 44% of people are put off by the perceived cost of advice
• 45% fear that the financial adviser would not act in their best interests.

The extent of misunderstanding and lack of take up of impartial, professional advice

• 45% believe they have defined benefit schemes, when the UK-wide figure is less than 15%
• 59% seek retirement planning advice from partial or unqualified sources rather than engage an impartial, professional financial adviser (41%). 37% would turn to their pension provider for advice, 13 % to their bank, while 12% say they would look to the FCA to advise them on their personal retirement planning requirements
• 47% say they have never received professional advice about their retirement plan
• 29% would not seek any further professional financial advice after they retire
• 21% do not know where to turn to for pension advice.

Income drawdown turn offs

• 51% are unlikely to consider drawdown either due to perceived complexity or a lack of trust in investment markets
• 12% said they would consider drawdown, but would not have confidence in the plan.

EValue acknowledges that efficient processing, being upfront about charges, intuitive client-facing tools, and access to free guidance are not panaceas for overcoming mistrust. However, they are essential to ensuring that consumers, having taken the first tentative step to accessing advice, face no further hurdles to engaging with the advice process.

EValue CEO, Paul McNamara, said: “As an industry, we need to pool insights to better our collective understanding of the root causes of the advice gap and to help consumers to act in their own best interests when it comes to planning effectively for their retirement. The value of timely, professional advice has been proven time and again, and while the perceived cost of that advice is turning off some people, our findings show that is not the biggest contributing factor for consumers not seeking advice. The fact that our research shows such a high percentage of consumers, who are at the age they can draw on their pension assets, are labouring under some pretty fundamental misunderstandings and have such deeply held misgivings about our sector, it leaves them wide open to pension scams.”