Article by Phil
Independent pension advice ignored by 34% of savers according to Scottish Widows.
Despite having paid for the independent pension advice in the first place. The reasons for not taking the advice, according to the survey included:
- Not thinking the advice was right for them – 33%.
- Thinking that the advice they were given went against their values – 28%.
- Not being clear about why they should follow the advice – 27%.
For financial advisors these results will probably ring true. Often the outcomes will be borne out of a lack of full disclosure. If the adviser isn’t given all the facts in a straight forward and honest way it will have an impact on the advice.
This would explain why so many customers didn’t think the advice was right for them. A key part of the process is for the advisor to understand exactly what the client wants to achieve and help them to achieve those goals. If the advice wasn’t right, it’s likely the goals weren’t clear. Similarly, advice going against values can only stem from a lack of disclosure at the outset about goals, including any fundamental values.
On the last point, the advisor providing the independent pension advice is likely at fault. No client should walk away without understanding the benefits of following the advice they have been given.
Talking about your finances makes sense.
Columbia Threadneedle have published the results of a survey which show that couples who talk about their finances feel much better for it. The survey found that:
- 70% of couple felt in control of their finances because they shared them with their partners.
- 72% said that they made better financial decisions after talking to over.
- 30% even said that they invested more money because they were confident they were doing the right thing together.
- Over 50% said that because they talked about their own finances, they felt confident about talking to other people about them as well, like friends and family.
These are just a few of the reasons that we always provide our independent pension advice to both partners together. It’s one of our golden rules.
Independent pension Advice reviews are important.
Once you’ve had independent pension advice it’s important that you receive regular reviews. These will ensure that your circumstances haven’t changed and that you are on track to achieve your objectives. We provide an ongoing review service to all our clients. Some take advantage of our six-monthly reviews. Others are happy with an annual review, sometimes over the phone or online rather than in the office. Either way the review is a vital part of the advice process.
The FCA are considering removing the need for firms to provide an annual review and moving the timescales onto the advisor’s discretion. This might suit some firms, but we will always provide an annual review as a minimum to all our fee-paying clients.
Advisors are valued.
91% of clients say that the advice they receive is either good or excellent and 97% say that they are getting value for money, according to Next Wealth.
Their survey also found that only 50% of those with the concerns that Scottish Widows found, thought their adviser was good and that they were getting value for money. Not surprising really.
Vouched For found that 99% of their clients would recommend their financial advisor to a friend. 86% also said that they fully understood the fees they were being charged.
Start investing early.
According to Fidelity, 40% of savers say that their biggest regret is not starting to save and invest sooner. Some other suggestions from their survey of investors included:
- Use tax efficient savings accounts like ISA’s.
- Make regular and consistent contributions into savings.
- Focus on the long term.
- Don’t panic when markets drop.
These are the people who did listen to their financial advisor of course!
Social media advice warnings
We’ve highlighted the dangers of investments promoted on social media time and again. Research by TSB has found that young people are starting to be affected by scams as well. 40% of under 35’s said that they trusted social media for financial advice. But 55% of those who had acted on the “advice” from the adverts and fin influencers had lost money. This was also making younger people feel worse about their finances.
Scammers prey on these feelings of missing out. Once hooked, victims are quickly taken onto private messaging platforms and bombarded by sales messages. From there, scammers quickly steal their money. Remember that 66% of financial adverts on Tik Tok are not regulated and breach FCA rules. Mainly over exaggerating returns and the level of risk involved.
Victims often look to their banks to help with compensation, but this is being challenged, and legislation is being called for which makes the social media platforms responsible for compensation. In the meantime, keep an eye on any young people in your family f they are investing online.
AI needs to be careful.
As we’ve said before, AI results also need to be treated with caution when it comes to advice.
Tools like Chap GPT are now readily able to provide answers to questions about financial planning. The problem is how accurate the answers are. Currently the estimate is that 50% of the answers are inaccurate in some way, although that is improving.
BrokerChooser looked at AI’s assessment of over 2,000 insurance brokers in the UK and found that it made the right call on whether they were scam brokers in 95% of cases. That is great but means that they were wrong in 5% of cases which is worrying. Google AI was wrong in 20% of cases.
AI can be very useful to help people to understand financial jargon. But advice and recommendations are a different thing altogether. There are already calls for AI providers to be regulated where their answers tip over the line into the provision of advice. Watch this space.
Get more information.
If you are looking for independent pension advice, then why not contact Christina today. She offers a free initial meeting to discuss your requirements and explain how our service works. You are under no obligation to use us after that if you don’t want to and we won’t pester you.
So why not call us today on 01282 614444 or e mail us enquiries@ccfps.co.uk or use our contact form online.
