"Savers are having to take greater responsibility for ensuring their retirement funds last the rest of their life and there is a risk they pick the wrong type of investments or fall foul of fraudsters "
The study found that 20% of advisers identified the threat of scams as the one issue most likely to reduce savers’ support for pension freedoms, while the same proportion regard investment market downturns as the biggest issue.
Advisers say the biggest challenge they face delivering the best outcome for clients is savers underestimating how long they will live in retirement, with 49% warning about longevity risks.
The study also highlights that a lack of saving remains a major issue and nearly half (48%) of advisers have turned customers away because their funds were too small to offer advice on. The research shows the average fund size advisers will advise on is just over £59,000, although 43% of firms say they do not have a minimum pension fund cut-off point.
They add that the most common mistakes made by their clients are failing to save enough and not seeking advice early enough. Around two-thirds (66%) say lack of saving is the most common issue they see while 62% say it is not getting advice early enough. Around a third (31%) say they regularly see clients who invest in areas they do not understand.
Vince Smith-Hughes, retirement income expert at Prudential, said: “Fear of falling victim to pension fraudsters is a major issue for retired people. Savers are having to take greater responsibility for ensuring their retirement funds last the rest of their life and there is a risk they pick the wrong type of investments or fall foul of fraudsters who promise high level of returns.
“This is why high-quality financial advice is good value for money. It will provide people with a financial plan for retirement, help them select the right type of retirement plan and also avoid fraudsters and inappropriate investments.
“Those people who have small pots can make use of the Government’s free guidance service, Pensionwise, which can help them understand their options, whether they choose to go on to receive advice or not. The Pensions Advisory Service also has some excellent information on how to avoid scams, including a tool to help identify when a scam may be about to occur.”
