There’s a lot to think about when you start taking money out of your pension – or if you want to bring pensions together to make them easier to manage. But you don’t have to make the decisions on your own. We talked to Charlie Nicol, Senior Adviser, about the value of getting advice on this challenging topic.
The value of retirement advice
First, what is retirement advice?
"Retirement advice focuses on using the money in your pension effectively. Some people want advice about how they should access their money. For example, is a flexible retirement income (also called drawdown) more suitable than a guaranteed income for life through an annuity? Others want to know if they would be better off transferring a pension to us. In this case we’ll do a detailed analysis of their options. Advice is particularly important with final salary pensions or schemes with safeguarded benefits. What all clients want is personalised advice, based on their own circumstances. Some meet us in Fidelity’s London Investor Centre, others are happy to meet by phone. Either way, we get to know our clients quite well, which is important because we need to take into account their personal circumstances and requirements, such as the lifestyle they want and whether they wish to leave a legacy for loved ones."
Who could benefit from it?
"Almost anyone with a pension who is approaching retirement could benefit from taking advice. Pensions are complicated and there have been a lot of changes over the years. I have clients who are really successful in the world of finance who freely admit they don’t have the expertise to deal with this specialist area. Just to give you an idea of how much can be involved; our experts spend an average of 40 hours on each case, and they work on pensions all day, every day. With expert advice, you can make an informed choice for one of the most important decisions of your life. Retirement could last for 20 years or more, so making the most of your money is essential – and that’s before you think about looking after your loved ones."
Is there anyone in particular who might find advice helpful?
"It’s hard to answer this question, as the value of advice depends on individual circumstances – and I do believe that most people can benefit from it. That said, one area I would highlight is the Lifetime Allowance. The more money you have saved, the more you need to understand when taxes are due. Your savings can be ‘tested’ against the Lifetime Allowance multiple times during your life (depending on how you use them) and it applies to final salary pensions too. Many of my clients have been affected by this allowance in some way, including a number that didn’t expect to be."
Does it cost money?
"While any guidance we provide is free, we do charge for our advice. However, when compared with many providers, our fees are very, very competitive – typically between £2,500 and £3,500, depending on a client’s needs. In my opinion, it can be money well spent for most people, as it gives them reassurance that they are making the right choices for one of the biggest financial decisions in their lives. That said, there are times when the value of our advice is clear cut. One of my recent clients was paying £30,000 a year to their adviser, so moving to us saved them a lot of money. We also spotted a Lifetime Allowance issue that their previous adviser had missed. On other occasions, our advice can pay for itself down the line. A few months back, we discovered that one of our clients had made a mistake on the calculation for protecting against the 2014 reduction in the Lifetime Allowance, which is not surprising, as it can be complex. When we corrected the error, they were over £7,000 better off."
Is it possible to be impartial when you are part of Fidelity?
"We offer advice on pension transfers and retirement income through drawdown and annuities. For drawdown, our advice is restricted to Fidelity products, but if we don’t offer a product suitable for a client’s circumstances, we will always tell them. For annuities, we select the most appropriate product from the whole of the market. Our advice is completely impartial, and if we identify that clients are better off staying with an existing provider, or the right solution is a third-party annuity product, we will always tell them. To give a recent example; I explored the complex terms of a client’s pension and found in the small print that it allowed them to take more tax-free cash than the standard 25% that you find with most schemes. I recommended that they should stay where they were, as this would reduce their tax bill."
Call us for more information about our free guidance or expert advice. We’re available Monday to Friday from 9am to 5pm.
The government's Pension Wise service offers free, impartial guidance to help you understand your options at retirement. You can access the guidance online or over the telephone on 0800 138 3944.
This information is not a personal recommendation for any particular product, service or course of action. Pension and retirement planning can be complex, so if you are unsure about the suitability of a pension investment, retirement service or any action you need to take, please contact Fidelity’s retirement service or refer to an authorised financial adviser.
Exclusions, terms and conditions
Terms and Conditions
These terms and conditions (together with any relevant documents referred to in them) set out the terms relating to the Offer.
The promoter of this Offer is FIL Retirement Services Limited, St Cross House, St Cross Business Park, Newport, Isle of Wight PO30 5BP (“Fidelity’s retirement advice service ”).
This Offer is available when you agree to take either retirement advice or pension transfer advice for the first time from Fidelity’s retirement advice service between 26 November 2018 and 28 February 2019 (“Offer Period”).
- To be eligible for this Offer, you must be 45 years of age or older.
- This Offer is subject to your acceptance of Fidelity’s retirement advice service Terms of Business, which will be provided during your initial, free-consultation meeting.
Terms of the Offer
- The £500 retirement advice discount voucher will be redeemed against your final invoice.
- VAT, where applicable, will be calculated on the total advice fee before the discount voucher is applied.
- To use the £500 retirement advice discount voucher please provide the voucher code to Fidelity’s retirement advice service when you call and before signing Fidelity’s retirement advice service Terms of Business.
- This Offer cannot be redeemed against any of the following:
- initial deposit payable in respect of any advice given by Fidelity’s retirement advice service or
- annual reviews
- This Offer can only be used once and cannot be used in conjunction with any other discounts or offers, including the 20% partner discount.
- Any personal information you submit to Fidelity will be maintained in accordance with Data Protection legislation and used in accordance with the Fidelity Privacy Statement which can be found on the Fidelity website: fidelity.co.uk/security-privacy
- Fidelity reserves the right to cancel or amend the terms of the Offer without notice during the Offer Period. Any cancellation of, or changes to, the terms of the Offer will be notified to you on the Fidelity website: fidelity.co.uk
- The Offer will expire at midnight on 28 February 2019.
- The Offer has no cash redemption value.
Please note that regrettably we are unable to offer Fidelity’s retirement advice services to US or Canadian citizens.
Please remember, that the value of investments and the income from them can go down as well as up so you may get back less than you invest. You cannot normally access your pension savings until age 55. In addition, the value of any tax benefits will depend on individual circumstances and all tax rules may change. Pension and retirement planning can be complex, so if you are unsure about the suitability of a pension investment, retirement service or any action you need to take, please contact Fidelity’s retirement service, or, if you prefer, speak to an authorised financial adviser of your choice.