Spokespeople from the mortgage and pensions fields have highlighted gaps in the pension advice process as a growing opportunity for the intermediary community during the Financial Services Expo in London on Thursday.
Hosting the seminar, ‘Pension reform – customer reactions and motivations under the new rules’, John Malone highlighted this issue as being “the biggest story of the whole exhibition”.
He said: “Potentially there will be more people cashing in their annuities next year than there are first-time buyers buying, second-steppers buying and people taking out equity release mortgages. This represents a huge, huge opportunity for the industry. One of the problems we have at the moment is – who gives the advice? The answer is not clear, which means there are opportunities to be explored.”
Michelle Cracknell, chief executive of the Pensions Advisory Service, concurred, adding: “A number of people are either being required, because of their provider or under regulatory guidance, to go and get financial advice. This kind of undermines the real value attached to the advice process as essentially people are being told to do it rather than really appreciate just how much it can benefit them.
“Importantly, when people are looking for this kind of advice they are also struggling to find advisers who will take on the cases. There are a couple of reasons for this – sometimes the cases are very small and as an adviser you have the right to say that’s not my business model, I don’t deal with customers like that. And we don’t have a very good matching service between customers and advisers. I think we, as an industry, really need to work on improving this to try and bridge this advice gap.”
Meanwhile, Cracknell said the Pensions Advisory Service expects to receive around 150,000 pension-related enquires in 2015/16 in light of a continued lack of understanding over new pension reforms and heightened media attention.
She said: “In 2013/14 we looked after 76,000 customers. In 2014/15 we looked after 103,000. There was an unprecedented number of enquiries in August; last year we dealt with 320 calls per day; this year was just short of 400 calls per day. If we carry on this way we believe we will look after about 150,000 customers over the course of 2015/16.”
Cracknell went on to add that many of the enquiries handled were surrounding the new pension reforms but numbers were also on the rise due to additional media attention surrounding the pensions industry in general.