It is often said that we give advice by the bucket, but take it by the grain.
And for good reason, too. Many of us are reluctant to take advice, even when it is in our best interests (ask any Dentist).
But what about when the stakes are higher than simply remembering to floss? Would you be as willing to overlook advice if it severely impacted your financial wellbeing in retirement?
It’s an abstract danger, admittedly. Many people don’t feel as though they are ever going to retire, so why should they worry about putting money away for something so far ahead in the future?
The reluctance to take proper steps to ensure your financial security can stem from many places; some of them sensible, others not so.
But what are the two most common reasons for not taking financial advice? And more importantly, why could they be risky views to hold?
So, why aren’t people taking advice?
Data from the Retirement Advantage Retirement Sentiment Index report ‘Expanding Horizons’ reveals that the primary obstacles for most over-50s are:
- Trust (42%)
- Cost (31%)
Whilst the primary reluctance to take advice comes from not trusting advisers, and believing it to be too expensive, there is also a massive lack of general awareness. For example, 31% of people do not see the necessity in consulting a financial adviser, and 18% do not think an adviser would benefit their situation. This fear of the unknown is placing people who may have a real need for advice at financial risk, especially if they do nothing, or make a bad decision.
Lack of trust
Money is very emotive. People work hard to earn it, and (quite rightly) guard it fiercely. These feelings are amplified as the amount increases, so it can be hard to shake away feelings of suspicion when dealing with large sums, such as savings or pension pots.
Unfortunately, a common stereotype exists of a commission-hungry adviser who wants to sign you up for the latest scheme as quick as possible and rush you out of the door before you know what has happened. In most cases, this is false.
In fact, according to the ‘Value of Financial Advice Report July 2017’, nine in 10 people are satisfied with the advice received from their financial adviser (Source: International Longevity Centre). 63.2% of those people took their advice from an Independent Financial Adviser, meaning that even the vast majority of those who had chosen a restricted adviser were happy with the advice.
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.”
The true cost
Nearly a third of those surveyed were put off financial advice by the cost alone. If these people knew the cost of not taking advice, they would likely be surprised.
For example, according to the International Longevity Centre, the average amount that people who work with a financial adviser boost their assets by is £41,099. This equates to an average additional income of £773 each year across all age groups.
A common (and hugely false) misconception is that financial advice is too expensive to be considered ‘worth it’. If an adviser does their job properly, they add far more value than they take in remuneration. Many advisers choose to work on a percentage-based fee system, making it their priority to boost your wealth by as much as possible.
The value of advice
Financial advice has added £112 billion in extra income from pensions, and £2.5 billion to people’s savings and investments (Source: International Longevity Centre). This, combined with the reduced financial worry makes the value of advice huge.
For more information on the value of financial advice, view our infographic here. We’re here to help, call Sarah or Bev on 0115 933 8433 or email email@example.com
And remember to floss those teeth; it’s good for you!