Half of UK adults shun financial advice

The new ‘What’s your Number’ report from international financial services group Sanlam Ltd, has revealed that nearly half (48%) of all British adults have never taken financial advice. Of these, 34% believe that they can manage their finances perfectly well themselves, with this figure rising to 57% of over-65s.

Sanlam’s full report – conducted with 1,000 representative adults, as well as 500 adults with more than £100,000 in savings and 250 financial advisers – makes it clear that the majority of people are not sure how much they will need to fund a ‘comfortable’ retirement.

The report states that many of the people surveyed thought their lottery numbers were more important than having a clear target for their retirement pot.

The survey revealed that, despite a lack of active planning for retirement, many had clear goals on life after work. Indeed, 38% stated they did not want to worry about money in retirement, with over a third (34%) of those surveyed insisting that they wanted to maintain their standard of living. The results suggest that many people may have an unrealised disconnect between their retirement aspiration and how to achieve this – knowing what they want but not actually employing any kind of professional planning to reach their goals. And, with recent statistics showing that over-55s are set to become more indebted in the future, obtaining financial advice for retirement is only set to increase in importance.

Lawrence Cook, Sanlam’s head of UK intermediaries distribution, said: “At the heart of the problem, many are simply crossing their fingers – in some cases burying their heads in the sand altogether. The truth is the majority – 55% – have doubts they will be able to achieve the retirement they want. The fact remains that proper, robust financial planning is the best way to ensure you can achieve your financial goals in a smooth and timely way.

“Where the real value that an IFA can add now comes in their ability to engage in relationships with their clients, understanding the issues they face and helping them consider their whole financial universe to create a plan that can help them achieve their goals.”

Drilling down into the detail of Sanlam’s report there is a difference in attitudes to retirement from specific generations. Older generations were least likely to have spoken with a professional financial adviser, with over half (51%) of over-65s never taking any financial advice and 57% of these going further and saying that they could manage things perfectly well themselves.

Overall, those aged between 45 to 54 were the group least likely to seek financial advice.

In terms of gender, women were a lot less confident in the future than men, with only 12% of women ‘very confident’ they can build up a pension pot that allows them to retire when they want compared to 27% of men. Furthermore, many women admit that they would have to rely on their partner’s retirement provisions, including savings and investments (16% vs 10% of men) and inheritances (13% vs 8%).

While many people expressed a desire for a ‘comfortable’ retirement, many did not have anywhere near enough to support this in their retirement pot. The survey revealed that for a desired retirement annual income of £34,000, people needed a minimum pot of close to £1 million. However, the reality was that, on average, UK adults could only expect to realise a pot of around £355,000 and an annual income of only £13,000, leaving many with a significant shortfall. High net worth Individuals fared little better, citing a desired annual income of £59,000 but only having enough funds saved for an estimated annual income of £24,800.

With an anticipated gap between desired retirement incomes and actuals, many adults will need to find ways to supplement their pension income. One in seven adults (14%) felt that they would need to work in their later years, with this figure rising to one in five (21%) of under-35s resigned to this position. Meanwhile, 18% expected to rely on money tied up with their property by either downsizing or through equity release.

While two in five UK adults were happy to admit that they had a lucky number, just 7% knew the age that they would like to retire – marking this out as one of the most important aspects being neglected in terms of later life planning. Those who have not yet given this much thought may find our guide, When can I retire, which could help to start retirement planning.

While younger people seem to be more open to taking financial advice, those who are yet to start thinking about life after work might find our guides on Starting a pension at 20 or Starting a pension at 30 helpful. For those coming to plan for their retirement a bit later, it’s still not too late, with our Starting a pension at 40 guide.