“A lot of our clients are very savvy and know what they want to do. However, we do think that the second line of defence procedure clients are made to go through is good. It makes clients think twice and clearly makes them realise the consequences of what they are doing, particularly clients that want – or wanted – to take their whole fund.”
Andy Leggett, head of Sipp business development at Barnett Waddingham, says he believes in treating people like responsible adults. “Providers are quick to point out the benefits of taking advice. The second line of defence is also designed to give people very specific warnings and test whether they know what they are going. In a world where we enjoy many freedoms generally, the right approach is to set up responsible checks and balances and monitor how they are working.”
For Rupert Curtis, chief executive officer of Curtis Banks, there is no reason why non-advised clients should not be able to access drawdown, but he emphasises that advice is incredibly important – especially at the point of retirement. “If clients accumulated their pension funds with the benefit of advice they would experience the same benefits when drawing income.”
Table 4 looks further into the make up of providers and the percentage of customers that are advised and non-advised. Overall, it is very mixed, but as to be expected, the majority of customers (79 per cent on average) are advised.
Referendum and pensions
Still the talk of the town, not even the pensions industry can escape Brexit. Robert Graves, head of pensions technical services at Rowanmoor, says if retiring clients want to avoid market fluctuations then the certainty of an annuity may be attractive, but it will not benefit from exposure when markets are on the up.
“Drawdown, if managed sensibly, can help ride a degree of fluctuation in the markets, but clients will be vulnerable to a sustained downturn if they have no other sources of income. It depends on appetite for risk, so a combination of products may be a solution for some.
“The stating point for draw-down should be to determine a reasonable amount of income that can be withdrawn and maintained over a certain time horizon, while accepting that drawing a higher amount and a concurrent downturn in the market will deplete the fund too quickly – resulting in a lower income in future years, or running out of funds,” he adds.
Alastair Black, head of financial planning propositions at Standard Life, says that what is important – both before the referendum and now – is that customers understand the services and support they will need to retire with a good outcome.
“The prospect of Britain’s departure from the EU has simply added some new variables to consider. We believe we will continue to see a number of small pots being taken as cash with many people only having saved a short time as a result of recently being auto-enrolled.”
