However, the idea that knowledge makes us all experts now is a bit of an illusion. We are certainly better informed than we were 20 years ago, but though we tend to know about everything and anything – that knowledge in reality tends to be thin and sparse. And that’s perhaps a little dangerous sometimes.
Does the idea that the internet can answer any question we chuck at it prevent us from seeking professional expert help? It probably plays a large factor. The statistics concerning financial advice supplied by the ILC would suggest that people are not using financial advice as perhaps they could do – particularly within pensions. Most importantly, the results clearly show that those people not taking advice have proved to be financially worse off on average in the long run.
The results have been a long time coming. In order for the survey to show realistic outcomes the data from the report1 stretches back 18 years to 2001 so that it was possible to quantify how individuals’ specific savings and investments have matured over time.
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The survey split those who took part into 2 sections: the “affluent” and the “just getting by” and found that in both cases those who did take financial advice experienced an increase in their savings and investments:
- People who took financial advice between 2001-2006 resulted in a total boost to wealth (in pensions and financial assets) of £47,706 in 2014/16
- The “affluent” group gained on average an 11% boost to their pension wealth when taking financial advice
- On average, people who are “just getting by” can boost their pension wealth by 24% when they take financial advice
Increasing retirement savings
The survey results are particularly interesting because they highlight pensions specifically and how only a relatively small amount appear to seek financial advice. In general, (especially with auto-enrolment now), people tend to just fall into a pension scheme, which they may stay with for the rest of their working lives. However, all schemes are different, they offer their own unique benefits, and grow savings at varying rates. Our own needs and future goals may change throughout our lives and the economy and even the law could impact on how a scheme performs.
The fact that people are missing out on seeking advice is doubly mystifying because in this digital age retirement is no longer seen as a bolt-on of a few twilight years to our lives anymore. Medical science and technology have improved our life expectancy and health to the point where retirement can be looked on as an exciting new phase in our lives that needs to be prepared for physically, spiritually and of course financially.
The survey has shown that getting expert advice can have lucrative results but it is also about getting advice from the right financial expert. As well as guiding the first steps towards a pension, a good financial adviser will explain how having access to particular benefits such as pension release can give you more flexibility with your savings and how pension switch could effectively help increase your savings in the future. A good financial advisor will take into account your unique circumstances, as these benefits are not suitable for everyone and that pension release could lead to less money in retirement.
Ensure the company or individual you go to is regulated by the Financial Conduct Authority (FCA) and that they take your needs and aspirations into consideration, in order to find the most effective pension scheme on the market.