howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
a survey has found that 71% of people are worried about choosing the right pension for them whilst 41% said they didn't know enough to make an informed decision.
the government is about to launch a campaign to raise awareness of the importance of pensions.
one for barry i think.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
A very important issue Howard.
There are important choices to make in two stages:
1/ Where to invest to build up a fund (the accumulation stage). Better to start cheap and build up a fund initially before considering whether something more sophisticated would be suitable that has an opportunity to do better.
2/ How to take an income when you get to retirement (the distribution stage). For this there is a massive range of options that could mean 30% or more difference in the income you get. Only fully independent advice can advise on the full range of options from the whole market and this is essential at this stage.
The other choice people need to make is how or whether to get advice.
Most banks are withdrawing from providing advice and those that still do are likely only be offering what is called 'simplified advice'. The alternatives traditionally have been tied advisers, multi-tied advisers or independent advisers.
That is changing in a little over 6 months and the options will be 'simplified advice', though there are compliance issues that worry the advice industry, and few are likely to offer it. Then there will be 'restricted advice', the restrictions may be on the range of products that the adviser is able and willing to provide or the range of providers offered. The 'highest level' of advice will remain independent but to remain independent there are a new raft of requirements and it is expected that, as a result, there will be fewer independents and it will be more expensive. I personally do not believe that it need be more expensive and I will not change from independent and will not be significantly increasing my fees, if at all.
On the latter point, commission will be ending for those who still use that method and an advisers remuneration must be agreed between the adviser and client. Providers can facilitate the payment of that agreed fee however but various measures that in the past have been adopted by providers to disguise the impact of the charges on a product will be outlawed.
Beyond all of that there will be many different approaches to how the advisers will build their fee model. What I will say is this, many advisers will still be charging predominantly for transactions. In other words you will pay the fee (whether provider facilitated or not) effectively for getting someone to sell you something. The other model is where the larger part of an adviser's remuneration for delivering an ongoing service that you pay for and I would suggest that this is the model that will result in the best outcomes.
One final thing to say - planning for retirement is best started early, the earlier the better. It also is not only about pensions. A pension is only one of the tools available to build up a fund to provide an income when you retire. Neither is it only about investing and an eventual income either.
It is a complex matter but it is important for everyone and people should not be put off by that complexity.
Guest 653- Registered: 13 Mar 2008
- Posts: 10,540
Sound advice and I recommend Barry to any and everyone. He looks after my small pot and helps make it grow in the good times.
Roger
