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Know the difference between retirement guidance and advice

Important information - please remember that the value of investments and the income from them can go down as well as up, so you may not get back what you invest.

Many people only properly review their pensions when they want to take money out. At this point, they might have 40 years of savings spread across several schemes with different rules (and even different legislation) applying to them. It’s not always easy to make sense of everything at this stage, so getting help is a good idea. But what sort of help is needed?

You can choose to do much of the research yourself, including getting some free guidance, or you can take paid-for advice. They both have their advantages, so to help you understand more about them, we’ve interviewed two specialists in our retirement service – Alastair and Charlie.

Alastair: Guidance

Guidance can mean different things to different people, so Alastair is keen to point out that when you choose guidance from Fidelity, you are given a lot of help from highly trained specialists.

Alastair says, “When I talk with a potential customer, I make sure I take the time to get to know them and their requirements. I then provide a general overview of the options available on the market and talk to them about the things they need to remember. Finally, if it’s relevant, we look at the services that Fidelity offers and how they can take advantage of them.”

When asked to pick out the key benefit of guidance, Alastair suggests that it provides “reassurance”. He explains, “Guidance helps you understand the various choices you have and prompts you on all the things you need to consider. We find that many customers feel much more confident about making their own decisions after a ‘guidance’ conversation. This includes making sure you know about some of the potential pitfalls, such as your annual allowance dropping from £40,000 to £4,000 once you take more than tax-free cash from your pension…an important point if you are planning to continue contributing to your pension in the future.”

Alastair goes on to say “we can help clients with annuities as well as drawdown, so we can be a one-stop shop if customers are looking for a broader view”.

Charlie: Advice

With pension advice, you get a much more comprehensive service, with a personal recommendation at the end of the process. This is designed to help you make the best decisions possible, whether you are thinking about transferring pensions or taking money out of them. Charlie says, “This recommendation takes into account everything about your current position, plans and pension accounts - and it can take around 30 hours of work from the retirement team before the final recommendation is completed.“

He adds, “This is why advice is very popular with those who have enough knowledge to make their own choices but value having a second opinion from a specialist before making such a significant decision. For example, the Lifetime Allowance is a complex pension area and some people don’t even realise they have reached their limit; they then need advice about how to minimise tax impacts.

Of course, advice is also needed by people who just don’t know where to start and want someone to walk them through it all.”

Alongside these two groups, Charlie points out that there are some cases where you have to take advice, such as transferring a pension with certain benefits and guarantees. These are important decisions, so it makes sense in this situation to talk to advisers who specialise in retirement income issues to get high-quality advice from retirement specialists.

Charlie finishes by saying that advice really can pay for itself, as pensions are far more complicated than some people realise. He says, “We look at thousands of pensions every year, but I still find circumstances and conditions that I haven’t seen before. Although there’s a fee for advice I find that people who could benefit from it do recognise the value once they’ve had a chance to talk with us. After all, pensions represent a lifetime of savings, so it’s important to make the right decisions.”

Advice or guidance: At a glance

Guidance

  • You make the decisions on your own
  • You get information and support, from our website and over the telephone.
  • You get guidance to help you avoid potential pitfalls
  • You don’t pay a fee for guidance

Advice

  • We double-check your plans, will advise you on a suitable course of action and give you a personal recommendation, in writing 
  • We take you through everything you need to think about over the phone.
  • We make sure you don’t get caught by any potential pitfalls
  • We charge a low flat-rate fee for advice
  • We are ‘Gold Standard’ certified for safeguarded and defined benefit pension transfer advice. 

Get support with your plans

There are some big decisions to make at retirement. Our retirement specialists are on hand to help. You can call us on 0800 860 0048. We’re open 9am to 5pm, Monday to Friday. 

You may also want to contact the Government’s free and impartial Pension Wise guidance service which can help you understand your options at retirement. You can access their guidance online at www.pensionwise.gov.uk or over the telephone on 0800 138 3944.

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Important information

Withdrawals from a pension product will not normally be possible until you reach age 55. 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.

Pension transfers are a complex area and may not be suitable for everyone. Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the benefits, charges and features offered. To find out what else you should consider before transferring, please read our transfer factsheet. If you are in any doubt whether or not a pension transfer is suitable for your circumstances, we strongly recommend that you seek advice from an authorised financial adviser.

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