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3 in 4 people approaching retirement have not taken professional pension advice

02/03/2015

77% of people approaching retirement have never sought professional financial advice in relation to their pension. However, at the same time, only 17%* say they understand pension income drawdown, which is set to become a more mainstream source of retirement income when the new pension freedoms come into effect in April.

This data suggests there is a significant danger that if people do not understand the new pension freedoms and do not take advice, they will withdraw their money too quickly and be left, in the longer term, relying on state benefits.

A new survey of 943 people aged 45–65 conducted by YouGov on behalf of Old Mutual Wealth shows that 35% of people have never sought any kind of help or advice about their pension savings. 17% have spoken to their product provider or have done their own research online, 16% rely on help from friends and family. Including those in the age group already retired, only 21% have taken advice from a professional financial adviser. The full breakdown of the data is provided below.

Encouragingly, 40% of 45-65 year olds have already heard of the Government’s new ‘Pension Wise’ guidance service even though it is yet to launch in full. Pension Wise seeks to help those approaching retirement to understand the new rules around accessing pension savings that come into force on April 6. The service will play an important role in signposting retirees to regulated financial advice where appropriate.

Financial advice and planning can have a real impact on the level of income people have in retirement. Retirees today that saw a financial adviser at least once before retirement and had a target income have an actual income that is 49% higher than those that did neither*.

Paul Feeney, chief executive of Old Mutual Wealth, comments:

“The new pension freedoms are great news because they give people control over how they can access their retirement savings but they could be a disaster without financial advice. We all know that with greater freedom comes greater responsibility and the Government has placed the responsibility for a secure and prosperous retirement firmly on to the individual. People are reticent about seeking advice, they shouldn’t be. An hour’s meeting with a financial adviser can make all the difference and in the new pensions world it is even more important.

“I think there will be a flood of demand for professional financial advice after the reforms come in, as people focus more closely on their pension savings. 40% of people have already heard of the new Pension Wise guidance service but this is only set to grow and I think it will prove to be an effective feeder service for full financial advice.

“All advisers within our Intrinsic network are on the Pension Wise adviser directory and we are expecting to see a significant increase in demand for retirement income advice from people using this service who will realise they need full and personal advice in order to make the most of the new flexibilities.”

Michelle Cracknell, chief executive of The Pensions Advisory Service, adds:

“This research provides evidence of why the guidance is so important. People struggle with the retirement option choices and do not necessarily know how or where to access help. Guidance is the start of the journey that helps people know the information they need, the questions to ask and where to go. We believe that guidance will help people understand their options, and as a result, some may choose to take advice as they will understand the importance of the decisions that they will be making.

“It is encouraging to see that people have heard of Pension Wise and we hope that this awareness grows when the first wave of retirees experience the guidance.”

Ends

Notes to editors:

All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 943 adults aged 45-65 years old. Fieldwork was undertaken between 19th - 20th February 2015. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

* Source: Old Mutual Wealth Retirement Income Uncovered report, December 2014

Which, if any, of the following have you EVER sought help/ advice from in relation to decisions about your pension? (Please select all that apply. If you have never sought help with decisions about your pension or don't have a pension, please select the relevant "Not applicable" option.)

Base: All GB adults aged 45 to 65 online

851

An independent financial adviser

21%**

A bank

2%

A pension product provider (i.e. **not** including any bank)

17%

A newspaper

5%

My own research online (e.g. price comparison websites, customer testimony etc.)

17%

Friends and/ or family

16%

Other

6%

Don't know/ can't recall

6%

Not applicable - I have never sought help/ advice with decisions about my pension

35%

Not applicable - I don't have a pension

10%

** This figure rises to 23% of those respondents who are not already retired

In April 2015, the Government is launching a "Pension Wise" guidance service that aims to help retirees take advantage of new pension rules... Before taking this survey, had you heard about this new pension guidance service being provided by the Government?

Base: All GB adults aged 45 to 65

1,700

Yes, I had

40%

No, I hadn't

60%

Retirees today that saw a financial adviser at least once before retirement and had a target income have an actual income that is 49% higher than those that did neither:

• £17,500 – annual income for today’s retirees with no target set.

• £20,800 – annual income for today’s retirees that sought financial advice.

• £26,000 – annual income for those that sought financial advice and had a clear target.

For more information contact

Tim Skelton-SmithOld Mutual Wealth02380 916 99807824 145 076tim.skelton-smith@omwealth.com

Notes to editors:

Quilter is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

On a ‘go forward basis’, Quilter oversees £ 111.6 billion in customer investments (as at 31 March 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset and single strategy investment solutions; and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Old Mutual Wealth’s multi-asset investment solutions business.

The Quilter businesses will be re-branded to Quilter over a period of approximately two years following separation from Old Mutual:

  • Intrinsic to Quilter Financial Planning
  • Private Client Advisers to Quilter Private Client Advisers
  • The Multi-Asset business to Quilter Investors
  • The UK Platform to Quilter Wealth Solutions
  • The International business to become Quilter International
  • The Heritage life assurance business to Quilter Life Assurance
  • Quilter Cheviot will retain its name.

On 19 December 2017, Old Mutual Wealth announced that it has agreed to sell its Single Strategy asset management business to the Single Strategy Management team and funds managed by TA Associates. The proposed transaction is subject to customary closing conditions, including regulatory approvals. 

Quilter is part of Old Mutual plc, a FTSE 100 group that provides investment, savings, insurance and banking. For the year ended 31 December 2017, Old Mutual reported an adjusted operating profit before tax of £2.0 billion. For further information on Old Mutual plc and the underlying businesses, please visit the corporate website at www.oldmutualplc.com.

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