Only one in five of the over 55s are willing to pay for financial advice when they make a withdrawal from their pension - falling to just 13% of men
When asked why, 59% don't feel they need it, 28% think it's a waste of money, 27% can't afford it and 15% want their money quickly without any hassle. One in ten women feel intimated by advisors
Just one in five will take the free 30 minute session provided by Pension Wise and cite it as a reason for not paying for the service of an IFA
Of those that are planning to pay for advice, the majority (82%) are doing so as they want to get such a major financial decision right
However, when it comes to cost, consumers would be willing to pay an average of just £253 for financial advice - more than half (60%) would pay £200 or less
With more than one in four (27%) over 55s with a pension planning to make a withdrawal following the introduction of Pension Freedoms in April 2015, new research1 from money.co.uk reveals that half of these people will not pay for financial advice.
In fact, just one fifth would be willing to pay for it, dropping to just 13% of men. Just 20% of those not willing to pay claim they will take advantage of the free 30 minute session offered through the Government's Pension Wise initiative.
Official figures show2 that to date just a quarter of the 85,000 people that have taken advantage of pension freedoms used this service.
With so many unwilling to fork out for independent financial advice, our research also reveals that almost two out of three (59%) do not feel they need it. Over a quarter (28%) think it's simply a waste of money and 27% say they cannot afford it.
15% claim they just want to access their money quickly and do not want the 'hassle' of taking advice. For one in ten women, using a financial advisor is a daunting prospect that they claim they would feel too intimidated to use one.
However, with such important investments at stake, decent financial advice is likely to turn out to be money well spent, particularly when it comes to navigating tax rulings.
In fact, only one in three (38%) of those making a withdrawal admit they fully understand the tax implications of doing so which could lead to a huge financial loss for some. money.co.uk's guide around tax on pensions should help consumers to navigate this maze.
On average, those planning to make a withdrawal from their pension would be willing to pay just £253 for financial advice. With the average cost of an initial financial review almost double this at around £5003, many of these people might be in for a shock when they research the costings and subsequently change their minds.
According to recent research4 the Treasury is set to get an unexpected tax windfall of £700 million. This is considerably more than the £320 million officials originally forecast that pension freedoms would contribute to tax revenues.
Before you make any decision on your retirement savings, Pension Wise should definitely be your first port of call. It's free and only takes 30 minutes, so what have you got to lose?
Keep in mind this service will only talk you through your options, you won't get specific advice; so while it will help, it won't give you expert insight.
Given you stand to lose a fair whack of your retirement savings to the taxman if you get things wrong, getting help from a decent financial advisor is likely to be worthwhile - even if you have to shell out for it.
Our concern is that people will rush into a decision without fully researching the long term impact or costings, simply because they need cash fast. After all, many people making a withdrawal from their pension are doing so to keep up with day to day living expenses.
Looking before you leap and all those other clichés really are the name of the game, especially when you're gambling a financial future that you've worked so hard to save for.Source: Hannah Maundrell, Editor in Chief money.co.uk“
You can get Pension Wise guidance online, and a consultation over the phone or face-to-face (call 0300 330 1001). Before you have your session you should;
Find out the value of your pension(s) from you latest pension statements
Think about when you want to stop working and how much other income you might have in retirement
Check for any forgotten pensions using the Government's free tracing service
Get a free state pension estimate (visit gov.uk or call 0845 3000 168)
For more details on how and where to find information on cashing in your pension, money.co.uk has produced a comprehensive guide to help.
1 - Research was carried out with One Poll on behalf of money.co.uk from the 26-29th June 2015 amongst 669 over 55 year olds with a pension
2 - Pension Wise, July 2015
3 - Research carried out by Hargreaves Lansdown, July 2015
4 - Research carried out by unbiased.co.uk
money.co.uk, recently ranked second fastest growing business in the Sunday Times Fast Track, was established in 2008 by Chris Morling and remains the only independently owned comparison website within the top players in the UK. The Cirencester based business employs around 40 people and is currently one of the most used financial comparison websites in the UK, attracting around 2.5 million visitors a month. It's a free, online comparison service which allows customers to compare a range of personal finance products and utility services. The website compares over 20,000 products across 56 categories using over 800 comparison tables, offering consumers the best tools and information.