A majority of those retired or close to retirement remain reluctant to seek financial advice, with many doing so because they do not see it as good value for money, according to research conducted by LV=.
A year on from the Financial Advice Market Review (FAMR), with its 28 recommendations intended to make financial advice more accessible and affordable, some three-fifths (61%) of those approaching retirement say they still do not plan on using a professional adviser, while half (52%) believe they can make the right decisions without advice.
LV= surveyed 1,008 UK adults aged 55 and over who are retired or plan to retire within 10 years, and found what it called a distinct lack of understanding as to what financial advice offers.
A third (33%) of those surveyed were not certain they knew the difference between guidance and advice, while just one in five (22%) felt advice represented good value for money. Similar proportions felt comfortable doing their own research(23%) and that they did not have enough money to make advice worthwhile (22%). Meanwhile 15% of all those surveyed thought advice was too expensive.
According to LV=, these results demonstrate an urgent need for the Government, regulators and the financial services industry to do more to show consumers the value of advice, including better promotion of the FAMR reforms.
The group said the flexibility given to consumers through pension freedoms had created greater complexity and, without financial advice, they were at risk of making the wrong decision.
‘Mis-buying crisis’LV= head of policy Philip Brown said: “The poor understanding of financial advice is particularly worrying at a time when consumers are faced with more complex decisions about retirement than ever before.
He added: “Although the work on FAMR is set to address the advice needs of the mass market, not enough is being done to educate consumers about the value of advice.
“LV= has repeatedly warned that, without further action to increase take-up of advice, we face a mis-buying crisis. Showing consumers why advice is good value for money is a key part of this.”
LV= has previously argued the creation of a single financial guidance body is an ideal opportunity to address consumer misunderstanding issues, and called on the new body to be required to signpost people to advice, where appropriate, and also to publish regular statistics showing how many people are being directed to advice.