Adrian Walker, retirement planning manager at Skandia, said providers should not deliver the guarantee because of the problems that could arise from retirees with multiple pension pots receiving guidance from a variety of sources.
“Consistency in the output of this guidance is critical,” he said. “This helps to answer the ‘who’ question, and in our view this puts paid to the suggestion that at-retirement guidance can be delivered by providers.”
'Snapshot'
The “guidance guarantee” was first announced in March’s Budget, as chancellor George Osborne pledged to provide financial guidance to every retiring member of a defined contribution (DC) pension scheme.
But Walker said the proposed guidance should only represent a “stepping stone” in the advice hierarchy, enabling retirees to go on and pursue more detailed guidance from a financial adviser with at least a “snapshot” of what they are looking for.
“The result should be two-fold,” he said. “First, a report completed to an industry-approved standard providing a view of the individual’s financial situation. Second, an indication of where and how they can arrange a meeting with a financial adviser appropriate to their needs.”
He added that it is important to understand the importance of the “decumulation” phase of retirement which, if implemented wrongly, can leave people with very few options.
“Full, professional advice offers the individual the best chance of avoiding these circumstances.”
'Huge void'
Earlier this month, the Association of British Insurers (ABI) also questioned the suitability of providers in fulfilling the new Government advice demands.
Speaking at a roundtable, the ABI said that providers were “not in the best situation to deliver the advice” until Osborne’s pledges had been clarified.
The body added that, until this time, the advice would be better provided by not-for-profit organisations such as The Pensions Advisory Service (PAS).
Investment company Fidelity later criticized the ABI’s claims, saying they would create a “huge void” in the advice sector, and placed an “unrealistic” level of demand on the PAS.
“There is no doubt that providers as a whole cannot easily be trusted,” said Fidelity head of retirement insight John Higham. “Some providers do, however, provide excellent guidance and advice.”
