17 March 2010

CONFUSION ABOUT RETIREMENT FINANCE OPTIONS AS BRITONS TURN TO INTERNET INSTEAD OF IFAs, SAYS SHIP

  • Only 8% of Britons regularly consult an IFA but 32% of Britons search the internet for financial advice
  • Over 50% expect to have a high living standard in retirment, yet 73% intend to plan their retirement finances without seeking financial advice

Research from SHIP (Safe Home Income Plans), the equity release trade body, has revealed that only 8% of Britons regularly seek financial advice from an IFA when it comes to planning their retirement finances. The highest proportion (32%) of Britons looking for financial advice turned to the internet for guidance on their retirement. In addition 9% has met with an IFA only once, 4% had taken advice from a bank or financial institution, and 6% had taken advice organised by their employer.

The research was carried out by SHIP to gain a greater understanding of how people expected to organise their retirement finances. It found that most people hoped to maintain their current living standard into retirement (38%), with over 10% expecting to exceed it. This is despite the fact that 73% of those questioned intended to manage their retirement finances themselves, without seeking advice from an IFA.

Although the majority of people expected to have a high living standard in retirement they seemed unaware of the full range of retirement funding options avaliable to them. Most people planned to fund their retirement with some form of pension. However when asked about structured pension plans, 23% said that they had one but that it wouldn’t be enough for them to retire on, and 35% had no regular pension at all (See Table 3)

When asked about equity release many did not have a clear view of what it actually entailed and come had never heard of it al all (14%). When asked for their definitions of equity release, 9% of people wrongly idenified it as a remortgage, and 32% of people throught it was a form of sale and rent-back.

Andrea Rozario, Director General of SHIP, commented on the findings:

“It is interesting to note that although 73% of Britons consider that they are responsible for their own retirement finances, so few are regularly consulting financial advisers to ensure that they are making the most of their money.

“The findings show that woithout consulting an IFA, consumers are likely to miss out of the full spectrum of retirement planning products. There seems to still be some uncertainty about the definition of equity release, but SHIP is working hard to increase consumer understnading of the product, Financial advisers can help to pay a key role in developing and expanding the industry, and we encourage them to give us their feedback through ‘www.ship-ltd.org.uk’

Table 1
Have you had professional help plannning your retirement?
Answer Options Response Percent
Yes, I see an IFA (Independent Financial Adviser) regulary 8.4%
Yes, I once saw an IFA 8.7%
Yes, I have had advice from my bank/ other financial institution 3.8%
Yes, My employer organised for me to get advice 6.3%
No, I am planning my retirement finances myself 72.9%
   
Table 2
Which of the following have you done personally to plan your retirement?
Answer Options Response Percent
Done research on the internet 31.7%
Requested information from a product provider 16.4%
Asked friends and family 27.7%
Purchased am asset (e.g. house) as a ‘retirement nest egg’ 17.4%
Spoken to your partner about their plans 28.8%
Asked your employer about pensions provision 31.9%
   
Table 3
Do you regularly save into a structured pension plan?  
Answer Options Response Percent
Yes, and it will make up the majority of my pension provision 20.9%
Yes, but it won’t be enough for me to retire comforably onto 23.0%
No, I have saved into one in the pasted thoguh 21.4%
No, I have no regular pension plan 34.7%
   
Table 4
How will you fund your retirement? (tick all that apply)
Answer Options Response Percent
Private pension 35.2%
Company pension 44.7%
State pension 61.4%
Savings 50.7%
Income from rental property 9.2%
Downsizing my home to release cash 18.2%
Use equity release 2.6%
Interest from investments or savings 14.8%
Income from part-time work 16.8%