If you are serious about making the right decisions at retirement you should get expert advice. Although you can get free advice or you might be tempted to use a non-advised broker or investment platform, these services simply do not do enough to ensure you make the right decisions.
You can get free advice from Pension Wise which provides free and impartial information on your retirement options if you have a money purchase pension. Pension Wise can help if you are aged 50 or over, have a personal or workplace pension and want to make sense of your options.
The help and information from some parts of Pension Wise is brilliant but it is only ‘guidance’ and therefore lacks one very important ingredient – it does not tell you what the best solution for you is.
You will be left to make your own decisions. Although you will be given lots of information, this is not enough. You will need help in deciding what options and solution is best suited to your circumstances.
There are several no-advice brokers or investment platforms which may appear to offer you a good deal but they are selling something not advising you. With no-advice you must make your own decisions and select your own investments. This may sound easy but in practice it is more difficult than you think.
A good adviser will do everything Pension Wise can do i.e. explain all of your options in language you can understand, as well as doing everything a good no-advise broker can do, e.g. get the best deal and in addition, an adviser will make sure you make the right decisions because they are the only people who can give you proper advice.
Pension freedoms have transformed the way you can access your pension pots at retirement because you now have the control and flexibility to spend your pension pot as you want.
It easy to fall into the trap of thinking you can make the right retirement decisions without financial advice. But retirement advice is much more complex than you might think:
But you may not realise that you are influenced by a number of behavioural biases which can result in poor decision making.
Poor numeracy skills and lack of understanding will have a negative influence on your decision making. A good adviser will help you overcome your behavioural biases.
Some of the most common behavioural biases are as follows:
By presenting facts and figures in a clear and concise way and making sure you understand the importance of taking a long-term view of your retirement needs, a good adviser will help you avoid making mistakes resulting from your behavioural biases.
You may be tempted to make your own investment decisions but if you don’t have the expertise to make the right fund selection you may end much worse compared to getting financial advice.
If you need investment advice for your savings or investments, a good adviser will discuss your attitude to risk and longer-term objectives and then recommend a suitable strategy.