Savers need considered advice - not the hard sell

Jonathan Stapleton asks if marketing of pensions freedom is turning into propaganda?


Several weeks ago, I received an email from a prominent financial advice group (incorrectly) warning me the recent share price fall in a certain FTSE250 firm could lead to the trustees of its pension fund amending benefits to reduce liabilities.

The advisory firm said it was "crucial" for members to understand the risks facing their schemes and know how they could mitigate those risks (presumably by transferring out into a contract-based alternative).

Last week, I received a letter from my own financial adviser - telling me not all schemes would be offering the flexibilities announced in this year's Budget and urging me to consider transferring my pension fund to ensure I could "take full advantage" of the changes.

Just yesterday, I received another email from a third firm of advisers - saying that a third of its pension clients had "actively enquired" about "cashing in" their pension pots next April.

This firm said its advice was to resist the temptation to access pensions early - but to consider a more traditional drawdown approach instead.

The gates are well and truly open and the commercial stampede to take advantage of the Budget flexibilities is now under way.

While many advisers, providers and asset managers will be responsible and provide pension scheme members with excellent advice and quality, value-for-money products; there will be a small number that fail to do this and do not provide good outcomes for members.

The advisory communications I have seen so far seem to be leaning towards the hard sell rather than the considered advice (although I accept the considered advice could well come after you have responded to the marketeers' push. 

Last week, my colleague Jack Jones quoted one industry expert as likening parts of the early market to the Wild West.

If we are to avoid the need for a sheriff to ride into town, advisers need to up their game and cut out the misguided rhetoric and concentrate on helping members make sound financial decisions for the future.

Jonathan Stapleton is the editor of Professional Pensions

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