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According to the report, in the years 2012 to 2014, only 16.8% of people took financial advice when taking out an investment product. Over the last few years 78% of people taking out a personal pension did not take financial advice at all. 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 2001-2007 accumulated significantly more liquid financial assets and pension wealth than their unadvised equivalent peers by 2012-14
- The ‘affluent but advised’ accumulated on average £12,363 more in liquid financial assets than the affluent and non-advised group, and £30,882 more in pension wealth
- The ‘just getting by but advised’ accumulated on average £14,036 more in liquid financial assets than the just getting by but non-advised group, and £25,859 more in pension wealth
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.