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The power of advice: Majority of over 55s who think they know what retirement financial solution they need change their minds following financial advice

Posted in: Research

  • One in four (25%) over 55s taking later life funding advice have an idea of what financial solution they want
  • However, of these, more than half (55%) changed their mind after speaking to an adviser
  • Half (47%) of those seeking financial advice for their retirement don’t know how much they have in their pension pot
  • Advisers report that their clients have many misconceptions about how retirement funding options including lifetime mortgages work

Research amongst later life financial advisers by OneFamily has revealed that a quarter (25%) of their clients have an idea of what they want when taking advice. However, of these people, over half of them (55%) changed their minds after speaking to a financial adviser, demonstrating the value and importance of financial advice.

Advisers reported that even when clients had an understanding of the later life financial options available, the majority of them misunderstood products, such as annuities, pensions and equity release.

When discussing equity release, advisers reported that seven in ten (71%) clients thought they could end up in negative equity, two thirds (66%) thought they couldn’t sell their home, six in ten (62%) thought they couldn’t make payments to reduce the size of their loan, half (51%) thought they couldn’t pay off a lifetime mortgage early or move it to a new property, and around four in ten (44%) thought they couldn’t switch lifetime mortgage provider. These, however are all incorrect.

This confusion about of the financial options available in later life is coupled with a lack of understanding of their own personal situation, as advisers also said that nearly half (47%) of their clients don’t know how much they have in their pension pot. With the average pension pot being worth £28,000 at retirement[i], or just over £1,500 per year based on the average retirement of 18 years, many over 55s could be in for a nasty shock if they have overestimated what they have saved.

Despite their property most likely to be their biggest financial asset, advisers say 40 per cent of their clients don’t initially consider their home as a financial asset to use in retirement. This presents advisers with the opportunity to help retirees use this asset effectively to fund their later years. 

When asked what the top concerns advisers say retirees face, their top worry is funding longer retirements, followed by mortgages continuing into retirement and finances becoming more stretched as younger generations need more help.

Nici Audhlam-Gardiner, Managing Director of Lifetime Mortgages comments,

“This research shows there is a lot of misunderstanding in the later life lending market, and demonstrates the value of taking financial advice. OneFamily supports advisers in helping customers identify the right solution for funding their retirement, with a broad  range of lifetime mortgage products and payment options.

“As the lifetime mortgage market continues to grow, so will the variety of homeowners and their needs. As providers and advisers, we play a vital role in helping over 55s get a complete picture of their retirement funding options.”

[i] Opinium Research – A review of the pensions landscape in 2017 https://www.opinium.co.uk/wp-content/uploads/2017/08/A-review-of-the-pensions-landscape-in-2017.pdf