More over-55s are turning to financial advisers than did so four years ago, new research from Aviva into the shape of financial advice for retirement in 2014, shows. But with 77% of over-55s having no relationship with an adviser – and no plans to establish one – Aviva’s findings reveal a worrying lack of understanding about the nature of financial issues in later life.
- Almost one in five (18%) of over-55s have spoken to an adviser in the last year.
- Sadly, 77% are entirely out of the loop with no plans to seek advice.
- Growing numbers are being surprised by the reality of retirement incomes.
- When seeking advice, getting the most from their pensions is the over-55s’ number one concern.
- Transparency has improved post-RDR – but many are still unsure on costs.
Almost one in five of over-55s (18%) now have an active relationship with a financial adviser, compared with 14% in February 2010. The biggest change has been among over-75s, with 17% now having a financial adviser compared with 11% four years ago.
Those aged 65-74 remain the most likely to use a financial adviser, with 19% having done so in the last year. Just 16% had done the same in February 2010. A further 3% of all over-55s are currently looking to establish a relationship with a financial adviser. However, with 3% unsure, this leaves more than three quarters (77%) with no active relationship with a financial adviser and no plans to establish one.
The advice gap is especially worrying in light of the widening gulf between expectations and reality when it comes to retirement incomes. The percentage of retired over-55s who are disappointed by their retirement income has increased from 10% to 15% since February 2010.
Encouragingly, more retired over-55s have incomes beyond their expectations than was the case four years ago (19% in January 2014 from 15% in February 2010). Over-55s are also more likely to underestimate than overestimate their retirement income (19% v 15%).
Getting the most from their pensions (52%) is the most pressing retirement issue over-55s would discuss with a financial adviser, which is a good sign, given the recent review of the annuities market and the potential to select a bad pension deal without proper financial advice.
Other priorities for over-55s include tax efficiency, budgeting for care costs and other major expenses, and options for drawing on their total wealth to cover the costs of retirement. 11%, sadly, were seeking advice on how to manage the debts they had.
Sitting down with an adviser can help to answer many of these questions for over-55s and can help to uncover alternative plans and opportunities in retirement. Getting financial advice can also help you to plan for the unexpected, giving you a full picture of how you are likely to be able to live your retirement.