Fear of financial advisors (and of paying for advice I don't need)

Albermarle

CSL0183 said:

I am a good couple of decades off retirement so forgive me, Is it a legal requirement to get financial advice to release your pension funds in a DC scheme? 

Why can’t you just use it like a bank account with no financial advice? 

There is no legal requirement to take financial advice to access funds in a DC scheme. The only limit is your age.

At least one large provider ( Pru) insists on you going through their advice team and charging you 3 % ( although you do not even get proper advice) . In this case you transfer out the pot to one of the many modern DIY providers before withdrawing from it, who will not charge you any one off fees like this. Setting up a new pension with a provider and transferring the old DC pension in, is relatively simple nowadays, and you do not need financial advice if you do not want it.

You will find that most DIY providers will advise that you get financial advice, as this covers their backs in case of future problems. However they will not insist on it.
Also when you begin withdrawing from the pension, you may well have to answer quite a few questions, so you can demonstrate that you are aware of the risks ( mainly of the pot running out too quickly). It maybe in written form or a recorded telephone call. Again this is to cover them in case you come back in 10 years time and say you never realised that investments can go down as well as up, and you never thought Tesla and Apple shares would crash and burn, or that taking 10% a year out of the pensions was too much etc  and your pot has run out already.

It is not quite like using a bank account though. For a start 75% of withdrawals are potentially taxable. Also you might have to cash in investments first before being able to withdraw. Plus the legislation around pensions can be a bit of moving target/minefield.

Marcon

eskbanker said:

CSL0183 said:

I am a good couple of decades off retirement so forgive me, Is it a legal requirement to get financial advice to release your pension funds in a DC scheme? 

Why can’t you just use it like a bank account with no financial advice? 

No, there's no regulatory requirement for financial advice to access DC money....

I thought there was a requirement to do so where the individual wants to take a cash lump sum from a DC arrangement which has safeguarded benefits worth more than £30K?

Linton

CSL0183 said:

I am a good couple of decades off retirement so forgive me, Is it a legal requirement to get financial advice to release your pension funds in a DC scheme? 

Why can’t you just use it like a bank account with no financial advice? 

You can if you want except of course unlike a bank account.you cant put much money back into the DC pension.

There are 2 main questions...
1) What investments do you use?  Too cautious and you may not for example be able to keep up with inflation.  Too risky, and you panic when your pot drops 40% in the next crash and you sell everything crystalising your losses.
2) How much money do you withdraw each year? If you get this wrong you could run out of money before you die or die a millionaire having lived in poverty.

If you have reasonable experience of investing you will probably get it right, otherwise.....

eskbanker

Marcon said:

eskbanker said:

CSL0183 said:

I am a good couple of decades off retirement so forgive me, Is it a legal requirement to get financial advice to release your pension funds in a DC scheme? 

Why can’t you just use it like a bank account with no financial advice? 

No, there's no regulatory requirement for financial advice to access DC money....

I thought there was a requirement to do so where the individual wants to take a cash lump sum from a DC arrangement which has safeguarded benefits worth more than £30K?

Indeed, post now corrected!

wjr4

Mark_d said:

Personally I would start with a well-know company with a good reputation eg.:
https://www.fairstone.co.uk/

A good reputation?

cfw1994

wjr4 said:

Mark_d said:

Personally I would start with a well-know company with a good reputation eg.:
https://www.fairstone.co.uk/

A good reputation?

Well, their website tells us they are the “#1 rated wealth management house on Trustpilot” 🤪
Although I’ve often felt that companies that talk about “wealth management” might be more interested in their own wealth 🤷‍♂️🤣

Maybe @Mark_d will return to share his experience 👀

Bostonerimus1

ali_bear said:

I've been making sub-optimal decisions my whole life so I have plenty of experience in that field 

OK look for small local IFA firm sounds like good advice 

Also be clear about what I want and agree terms

I have also been making sub-optimal decisions all my life, but I've found that you don't need to be perfect to be successful. Do some reading around the topic of retirement drawdown, do a detailed budget so you know how much income you'll need, get a SP forecast and understand the features of your DC plans as they might influence drawdown. Then come up with a plan ie asset allocation, life expectancy goal, drawdown percentage and how that might change with market conditions and your personal circumstances and ask for people's opinions on forums such as this.