How often do you consult a professional for advice?
It’s probably more than you think. Whether it be your health, your career, the car or IT troubles, sometimes you simply need the help of a qualified person.
What’s the alternative?
Sure, you can give it a go yourself in most cases, but the thought of making a mistake often puts people off. The same can’t always be said for financial advice, and the consequences can be far greater than a computer that won’t say anything other than ‘no’.
Reluctance to use professional help with your finances is understandable. Some people don’t feel that they need help, others don’t know that they need it and many don’t really know what proper financial advice is. In the run up to retirement, it is important to know how much money you are going to need, and how much you actually have. Without that information, how can you ensure that you won’t run into financial difficulties in later life?
So, what are the two most common reasons for not taking advice? And more importantly, why aren’t they necessarily true?
Why are people reluctant to take advice?
According to ‘Expanding Horizons’, a report from Retirement Advantage, the primary reasons given by over-50s for not taking advice are:
- Lack of trust (42%)
- High perceived cost (31%)
A lack of general awareness is also apparent, with:
- 31% of people not seeing financial advice as necessary
- 18% believing that financial advice would not benefit them
Whilst nearly one in five people believe that they wouldn’t see any benefits from taking advice, research from the International Longevity Centre suggests that 90% of people are satisfied with the advice they receive.
Let’s start with cost…
One of the biggest obstacles for people is seeing financial advice as a cost, rather than understanding the value it gives them.
Nearly one in three people believe that advice is too expensive, but most don’t know the true cost of not taking it. For example, research from the International Longevity Centre reveals that the average amount that people who work with a financial adviser boost their assets by is £41,099. Across all age groups, this equates to a substantial additional income of £773 per year.
According to Unbiased, people who take financial advice save, on average, £98 per month.
Be careful who you trust
It’s a common mindset with financial matters.
All too often, the news is scattered with reports of pension scammers, phishing and all manner of scary stories. Unfortunately, there are a few bad eggs out there, and it is important to be vigilant. However, not taking advice out of fear for something bad happening rarely puts you on track to achieving your financial goals.
There are plenty of ways to ensure that an adviser isn’t one of these bad eggs; the most important, checking the Financial Conduct Authority (FCA) register. The starting point is to check that they are on the FCA register. After that, take recommendations from friends and famlily, and when you start dealing with an adviser, trust your gut instinct.
The FCA register can be accessed here, and it is quick and simple to check an adviser’s name or firm against it.
Andrew Tully, Pensions Technical Director at Retirement Advantage, said: “The increase in trust in professional advisers over the last year is positive. However, the increase in those citing cost as a reason for not consulting an adviser is disappointing, particularly in light of the one in six that say they would trust their pension provider to give them the information they need. Previous analysis has shown that people who don’t shop around for the best deal on products, like annuities and drawdown, could lose out on thousands of pounds of income over the course of retirement. So, it is vital that more is done to encourage people to get professional advice and consider all the options available to them to make the most of their hard-earned savings.”
Is taking advice worth it?
In the vast majority of cases, absolutely.
In fact, advice has added £112 billion in extra income from pensions, and £2.5 billion to people’s savings and investments (Source: International Longevity Centre).