The success of freedom and choice will largely depend on the quality of advice and the number of people who receive it according to the industry.
A number of bodies and experts made the point in their responses to the Financial Conduct Authority's (FCA) consultation, Retirement Outcomes Review, which closed on 31 August.
The consultation looked at four areas including shopping around and switching, non-advised customer journeys, firm business models and barriers to entry and the impact of regulation on retirement outcomes.
Aegon, the Institute and Faculty of Actuaries (IFoA) and Barnett Waddingham all focused on the importance of advice.
The public need to gain a better awareness of the difference between guidance and advice. "People do not understand the difference and they need to. The whole area is less than satisfactory," said Barnett Waddingham senior consultant Malcolm McLean (pictured above).
Meanwhile the IFoA suggested information has to be clearer and better communicated to consumers. Communications should take an outcomes-based approach. This has the advantage of engaging consumers earlier to "help them understand how much they will need to meet their retirement goals," said IFoA president Colin Wilson.
Aegon observed the best way to improve retirement outcomes is to increase the number of people receiving advice in tandem with product development.
The FCA's acknowledgment of decumulation products which combined the security of an annuity with the flexibility of drawdown was welcomed by Aegon. "The recognition by the FCA of the importance of these hybrid products should help adviser firms feel more confident about incorporating them into their advice processes, and marks an important step toward them becoming truly ‘mainstream' retirement income options," said Aegon pensions director Steven Cameron.
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