More over-55s seeking financial advice as retirement incomes continue to spring surprises

Article date: 22 January 2014

  • Almost one in five (18%) over-55s have spoken to an adviser in the last year
  • But 77% are entirely out of the loop with no plans to seek advice
  • Growing numbers are surprised by retirement incomes
  • Getting the most from their pensions is over-55s’ number one goal
  • Transparency has improved post-RDR – but many feel cost is an issue

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.

More over-55s seeking financial advice

Almost one in five 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.

Financial adviser relationships*

All

55-64

65-74

75+

Over-55s with an adviser

18%

17%

19%

17%

Those without – looking to establish one

3%

4%

1%

3%

Those without – no plans to establish one

77%

76%

78%

78%

Those without – unsure of their plans

3%

2%

3%

3%

*Please note it is due to rounding that these figures do not add up to 100%.

Incomes shows expectations don’t always match reality

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 vs. 15% in February 2010). Over-55s are also more likely to underestimate than overestimate their retirement income (19% vs. 15%).

More over-55s are surprised by retirement incomes – for better and for worse

Feb 2010

Jan 2014

Change

Received significantly more than they expected

6%

4%

-2%

Received more than they expected

15%

19%

+4%

Received what they expected

75%

66%

-9%

Received less than they expected

10%

15%

+5%

Received significantly less than they expected

3%

6%

+3%

Priorities to discuss with a financial adviser

Getting the most from their pensions (52%) is the most pressing retirement issue over-55s would discuss with a financial adviser. Other priorities include tax efficiency, budgeting for care costs and other major expenses, and drawing on their total wealth to cover the costs of retirement.

The priority issues for over-55s to discuss with a financial adviser

How to get the most from your pension

52%

How you can structure your finances to make things as tax efficient as possible

36%

Budgeting for potential costs such as care

29%

How to use your total wealth to cover the cost of retirement

27%

What type of annuity is best for you

22%

Whether you want to leave an inheritance

21%

How to use your housing equity to make yourself more financially secure

13%

How to manage any debts you may have

11%

Jury is out among over-55s on financial advice post-RDR

Since the Retail Distribution Review (RDR) came into effect on 31 December 2012, 16% of over-55s feel the availability of financial advice has improved, 14% feel advice has become more transparent and 11% feel it is more useful to them.

However, 43% feel the cost of financial advice has increased over the last twelve months – a perception which may result from clearer charging structures and upfront disclosure of fees and how they will be paid.

Clive Bolton, managing director of Aviva’s At Retirement business, said:

“It is a promising sign that more over-55s are turning to expert advice to manage their finances in later life. Sitting down with an adviser to review your options in full can often uncover choices and opportunities to improve your situation. It also helps to avoid a scenario where your retirement income comes as a surprise and leaves you having to adjust your expectations.

“One year on from RDR, it’s important for advisers to recognise that clients over the age of 55 will need support throughout their later years on matters beyond their product choices, which is clear from the types of advice over-55s say they are interested in. From guiding people on their pre-retirement options while they are still earning an income, to making decisions further down the line about issues such as funding long term care, a working relationship with an adviser can make the difference between having control of your finances or having them control you.

“These challenges will become more and more important as life expectancies rise across the UK. There is a real opportunity for advisers who can offer a full, progressive service and really show the value they can provide their clients across all stages of their retired life.”

Watch the video

– Ends –

If you are a journalist and would like further information, please contact:

Aviva Press Office: Diane Mangan: 07800 691 714 or diane.mangan@aviva.co.uk

The Wriglesworth Consultancy: Andy Lane, Sinead Meckin or Rachel Morrod: 0207 427 1400 or aviva@wriglesworth.com

Methodology:

The Real Retirement research series was designed and produced by Aviva and Wriglesworth Research.  The winter 2013 findings involve 1,011 UK consumers aged 55 years and over, with 18,712 in total having contributed to the research since February 2010.

Wherever possible, the same data parameters have been used for analysis for the duration of the series, but some additions or changes have been made as other tracking topics become apparent.

About Aviva:

Aviva provides insurance, savings and investment products to 34 million customers worldwide.

We are the UK’s largest insurer with over 14 million customers and one of Europe’s leading providers of life and general insurance. We combine strong life insurance, general insurance and asset management businesses under one powerful brand. We are committed to serving our customers well in order to build a stronger, sustainable business, which makes a positive contribution to society, and for which our people are proud to work.

We are ranked as one of the UK’s top ten most valuable brands and Aviva Plc is in the top 10% of socially responsible companies globally in the Dow Jones Sustainability World Index.  In 2012 we invested £5.7m into our UK communities. One in three of our employees were involved in community investment activities which included giving nearly 30,000 hours.

Aviva is working in partnership with Railway Children through the Aviva Street to School programme to get children living or working on UK streets back into everyday life, especially education. Find out more at www.aviva.co.uk/street-to-school.

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