The value of retirement advice

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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.

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

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Pension Wise

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.

Important information

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.

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