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Why are we leaving financial advice so late?

Retirment planning is the main reason we seek out financial advice, but shouldn't we be doing this much earlier?


by Michelle McGagh on Aug 21, 2012 at 09:23

Why are we leaving financial advice so late?

Retirement is a big change, both socially and financially, so it is only right that people seek out financial advice on moving into their twilight years.

In fact figures show retirement is the main catalyst for seeking advice, but if we’re really going to live the life we want to in old age shouldn’t we be taking advice a lot earlier?

Figures from adviser search website shows retirement is the main catalyst for seeking advice, with 32% of inquiries to the website focused on retirement planning.

People are being hit by a double whammy of smaller pension pots where they haven’t saved enough and poor annuity rates that offer lower-than-anticipated income. It’s no surprise that you may need an expert to help you make the most out of your money.

But if we really want to make the most of our money and notch up multiple holidays a year in retirement, then surely we need to take advice earlier.

Taking advice at retirement is great but seeking advice earlier in life would help people plan for their retirement they want to lead. Yes, pensions and grey hair may seem a long way off to someone in their 20s or 30s but the reality is the early you start saving the better.

For those who are smugly thinking ‘I save already’, do you know if you’re saving enough? An independent financial adviser (IFA) would help you navigate the treacherous pensions path to ensure you were saving tax-efficiently and to full capacity.

So why don’t people, older or younger, get advice? Many people will say they can’t afford it, but if figures from JPMorgan Asset Management are anything to go by, affordability isn’t the only reason.

In a survey of 2,000 mass affluent and high-net-worth clients, just 13% said they would seek out regular on-going advice.

It’s worth noting that when the report says mass affluent and high-net-worth it is not solely talking about millionaires, the 2,000 have household incomes of over £50,000.

Although those wanting on-going advice was small, 40% said they would seek advice for certain tasks and overall 80% would seek advice of some sort.

This shows that the old accountant and solicitor model, where you only see them if you need them, pervades Brits’ collective conscience and we’re unwilling to keep paying for a service unless there’s a specific cause for it. I am also guilty of this.

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9 comments so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Aug 21, 2012 at 13:24

Why do people not use IFA's ? - because there is still an awful lot of distrust in the Financial Sector - the whole sector is completely untrust worthy.

What do you expect - LIBOR, PPI, Endowment Mortgages, Pensions and many other issues

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Aug 21, 2012 at 13:29

Financial Planning is not difficult, and within a few hours of reading, plus downloading various software products with trial runs for free, you can put together a good financial plan and see where you can save and cut costs etc.

Why pay someone else do it? Thats my feelings. But when I am looking at something specific, I do my research then speak to someone, then cross reference what they have advised. Retirement for example is at the bottom of my list. Luckly I do have an ok pension. But above Retirement I have things like ensuring the welfare of my family, ensuring I have cover incase anything happens, education etc. For me I would rather ensure my family has the best possible start rather then be having a comfortable retirement full of holidays. Have holidays now with family while I still again, and I have the memories forever!

They need to have financial planning in schools, so teenagers get an idea of pensions, Savings, investments, budgeting, insurance. How many schools help school leavers put together a budget for when they go to uni? or start their career??

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Insiders Comment

Aug 21, 2012 at 14:29

Advice will only be sought by the rich after RDR and the rest will no doubt try to muddle tgrough without the cost. The FSA can be thanked for this inevitable turn of events and ultimately the Government is to blame. So when the saving rate plummets amidst investors who have invested in the wrong funds and are nursing losses Cameron & Co are the ones to blame and i say this as a ife long conservative.

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Anonymous 2 needed this 'off the record'

Aug 21, 2012 at 14:58

I agree completely with the first posting. IFAs are not trusted. Their advice comes with no responsibility (i.e. they get paid whether their advice is good or bad), their advice is either a "black art" (your a "cautious investor so here's a cautious investor product) or "box ticking" with little or no understandable explanation for the average person.

Anyway, why do people (other than those who make money out of tying our investments up for a long time) think we have to plan retirement in our 20's and 30's. Everybody should be planning their finances, but at 20/30 should be focussed on living, housing and children. The last governments have all shown that long-term planning (10 years or more) is too open to changes beyond the control of the individual.

Focus on the near term.

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Jeremy Bosk

Aug 21, 2012 at 16:11

Aged seven when Yuri Gagarin first orbited the Earth I decided to become a cosmonaut. I knew someone who offered to teach me Russian. Before I left primary school I read Isaac Asimov's robot stories and decided to be a cyberneticist like Dr Susan Calvin. My grammar school, which for two years managed to not provide my class with a maths teacher, put paid to those notions.

I bought my first unit trusts in my late teens - a fund of investment trusts and a Japan Growth Fund. Ever since I have tried to save and invest. Every time I get a little ahead, I have to change jobs, move house, am made redundant, am robbed of my savings, get depressed and everything goes to pot. I do mean robbed, the solicitor involved was struck off.

There is only one year in my life I have earned the national average wage. Which involved working such horrible hours that I became ill. I could have taken out redundancy insurance, legal insurance, private medical insurance and so on. Which would have left me with no money to save and invest!

So make plans by all means: but do expect life to get in the way.

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Aug 21, 2012 at 16:18

KevHere -

SG + Annoymous- that is grossly unfair - understand were you are coming from but please do not tarnish all advisers with the same brush

Many of us could easily do a tax return on line - even as a small business but an accountant is used (and they are not as regulated)

I once read a book on brain surgery - but I wouldnt do it

Even one on how to servicing my car - I could attempt it - a lot of time spent though on trial and error and also do not have all the technology - actually the guys who do service my car are brillian - but I have to pay them not only for the parts but their time - all for peace of mind

Many like me have worked hard acquiring knowledge and have integrity.

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Anonymous 1 needed this 'off the record'

Aug 21, 2012 at 17:18

Hi KevHere, the comment was a general comment on why people don't feel confident with IFA's - as with aspects of life there is good and bad - the bad having the greater impact than that of the good .

This with the effects of the media don't give the general public a very good feel for anything in the Financial Sector - rightly or wrongly.

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Aug 21, 2012 at 19:03

KevHere - thank you, very true - I personally use people through recommendation, hence my car mechanic and also builder etc.

In relation to Financial Advice - we live within a Trust Recession - I personally do not offer free advice - because if its of value and worthwhile it worth paying for - this is what the general public has to get their heads around. Hence why I know its going to cost me to service my car - but its back to my peace of mind.

The likes of Peston and Co are not qualified but they do have the right to free speach - its just the General Public have to acquire some common sense and look around those comments

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Aug 22, 2012 at 08:20

I did not mean to tarnish anyone, and for the record my Dad was an IFA, and I have worked with many IFAs throughout my career. There are some exceptional IFAs out there and some at the bottom of the barrel. The majority I would say are ok/reasonable. As said if I have something specific I am happy to seek advice to ensure I make the right decision, as it is in the end mine to make.

As with Cars a lot of people again spend money when they could have done the job themselves.

It is becoming an issue as it seems more and more people would rather pay someone else do something rather then putting in a little effort and learn how to do it for themselves. These same people then complain when prices go up.

The problem is that something as important as budgeting and money is not taught. So people do not know the consequences of their actions.

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