Good news is hard to come by these days, so research showing that consumers who take pension advice stand to be better off by as much as £232 a month or £2,780 a year on average come retirement, is one piece of good news worth the wait.
Standard Life’s Value of Advice campaign, conducted with Unbiased.co.uk, confirms that consumers taking pension advice are actually contributing over one third more to their pension pots than those who don’t. What’s more, by dealing with an authorised and regulated adviser, consumers are better protected.
This report offers more by way of statistical advantage which IFAs can use to prove they are truly worth their salt – by a very large pinch. The report illustrates that the current average pension pot for advised-consumers on their retirement planning is £74,554.30 – double what the non-advised can hope to receive come retirement (£37,277.10).
For those pensioners who for the past couple of years have watched their retirement funds be eaten away by the rising cost of living and continuing low interest rates, it will be some relief to know that had they not sought advice they would be looking at even higher losses. It’s a sobering thought and one our profession needs to shout from the rooftops. And let’s face it, we may not get another such golden opportunity to highlight the good side of our profession for a while.
Retail Distribution Review
Another pertinent and timely report for IFAs comes from business advisory firm Deloitte, as it points out that the financial advice gap is set to widen as regulations such as the UK’s Retail Distribution Review come into effect.
While RDR is not yet a global requirement, a tighter regulatory regime on an international scale is becoming apparent. And, while our profession needs all the help it can get in making it a safer marketplace, when it comes to stopping people from taking advice, as the Deloitte report suggests the RDR will do, then surely it is failing in its mission.
The survey of more than 2,000 people conducted for Deloitte by YouGov shows consumers are generally unwilling to pay a fee for financial advice.
The survey found that more than half of all consumers (54%) would refuse financial advice if charged a fee, and 47% would be likely to reduce the number of times they use financial advisers if charged a fee of between £400-£600 or 3% of invested assets.
Obviously attitudes to paying for advice vary according to wealth and where consumers take advice. But with only 14% of people with savings above £50,000 saying they would be prepared to pay a fee, then we IFAs are facing an uphill struggle if RDR-style legislation is employed internationally.
So data such as the Value of Advice campaign assists us in getting across the message, at least to future clients, about structuring a fair pricing for our services.
When we can show the monetary gain they stand to profit from our advice, tomorrow’s clients will be much more accepting that our service isn’t, nor should it ever be considered, something that doesn’t have a fair price tag. Indeed, it’s a price tag to be proud of.
David Howell is chief executive of Guardian Wealth Management
