Just over 1 in 3 (37%) of all drawdown is sold on a non-advised basis, though the percentage is higher for small pots and much lower for large pots.
According to latest research published by the FCA, firms are generally providing people with relevant information and pointing them in the right direction, but unadvised individuals have often made their mind up what they want to do and/or are so keen to access their tax-free cash that they are not really engaging with that information.
Royal London director of policy Steve Webb said: “The FCA’s research reinforces the value of taking financial advice when making key at-retirement decisions. To many unadvised consumers are not engaging with the information which providers send them because they have already made up their mind what they want to do.
“In addition, many are very focused on accessing their tax-free cash and give relatively little attention to where the rest of their money goes, often leaving it in low-return cash investments. There may be a case for reviewing whether people should be able to access tax free cash and leave the rest invested so that they do not lose out on future investment growth. We also need to make sure that people get wake-up packs and other information much sooner, rather than after they have made up their minds.
“Royal London has recently developed information packs to be sent to people five years before retirement to help to address this issue and we hope that other providers will follow suit.’
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