Financial advice boosts retirement savings levels by nearly £100 per month

02 Oct 2014

  • Advised savers benefit from an additional income of £3,654 every year of their retirement
  • People who receive advice feel better prepared for their retirement than those who don’t 

New research from unbiased.co.uk and AXA Life Invest shows that financial advice encourages people to save more for retirement and helps them to feel better prepared for their golden years. The research found that nearly half (43%) of UK savers approaching retirement increase their retirement savings levels by £98 a month as a direct result of taking financial advice, boosting their savings levels from £89 a month pre-advice to £187 post-advice.

Advice pays in retirement 

Advised UK savers who put away an additional £98 monthly as a result of taking financial advice would receive an additional income of £3,654 every year of their retirement, based upon a pension pot of £100,000.

If a UK saver were to experience investment growth of 5% (currently the intermediate rate for tax-advantaged products such as ISAs and pensions, as prescribed by the FCA),[3] their cumulative pension pot would be almost £64k greater (£63,595) than someone who had not sought advice.

Mind the advice gap

When looking at UK savers over 40 who do not receive financial advice, almost half (45%) currently save no money whatsoever for their retirement, while 52% say they do not feel prepared for this key milestone. This indicates that a sizeable proportion of unadvised Britons could be woefully underprepared for the future and could face poverty in retirement.

People who seek advice have more peace of mind about their future than those who do not. Looking at all UK savers from 18 years and older who have not yet retired,[4] over half (54%) of the advised group feel well prepared for their retirement, compared with just 14% of those who have not received financial advice.

The earlier you seek advice, the better off you are 

The research indicates that UK savers who seek advice early on in their lives tend to feel better prepared for their retirement, while those who spent more time with their adviser tend to save more for their retirement.

How prepared do you feel for retirement, split by age when they first sought retirement advice[2]

Age when first sought retirement advice  Well prepared for retirement 

Not prepared for retirement 

18-24

71% 11%

25-34

52% 15%

35-44

41% 25%

45-54

39% 29%

The time people spend preparing for retirement with the help of an adviser also has an impact on how much they save. UK savers who have been seeking retirement advice for 11 years or over and have increased their savings as a direct result, save an average of £223 per month for their retirement, compared with £155 for people who have been receiving advice for less than two years.

To what did you increase your retirement savings as a result of seeking advice, split by how long have you been receiving retirement advice for

How long have you been receiving
advice on your retirement?

Less than 2 years 2-5 years 6-10 years  11+ years 

How much did you increase your
monthly retirement saving to as
a result of seeking advice?

£155 £149 £197 £223

What advisers say

unbiased.co.uk’s poll of over 200 independent financial advisers[5] echoes the findings from UK savers. Advisers say they are most capable of boosting a client’s retirement income levels fifteen years before their client’s retirement date.

Thinking about clients coming to you at different life stages ahead of their retirement – to what extent do you think you could boost their retirement income?

Stage client came to an adviser 

Proportion of advisers who thought they
could boost clients' retirement income

15 years before retirement

73%

10 years before retirement

51%

5 years before retirement

22%

At retirement

28%

Simon Smallcombe, Managing Director of AXA Life invest, comments:

“Our research shows that people save more each month as a result of taking financial advice. People who seek advice earlier save substantially more than others and consequentially feel better prepared for their golden years.

“At AXA Life Invest we believe that people should seek advice at least ten to fifteen years before retirement, so that advisers can significantly boost the level of retirement income UK savers receive. As with most things in life, planning and preparation delivers better results. The sooner you seek professional independent advice, the more likely you will be to be comfortable in retirement and enjoy it to the fullest.”

Karen Barrett, chief executive of unbiased.co.uk comments:

“This research highlights the improvement to retirement finances as a result of taking advice and whilst the impact of advice on the amount of money you put away for your retirement speaks for itself, the ‘softer benefits’ of advice shouldn’t be ignored.

“Retirement planning has always been the uppermost reason why people seek financial advice and this comes as no surprise given that the financial decisions you make for and at retirement are some of the most important you make in your life. The pensions world has seen a lot of change in the last few months, which has created even more options for consumers to consider, so having a professional adviser take you through the different options will help you to feel confident about the choices you make.

“Anyone planning for their retirement should seek advice from a whole of market financial adviser. For a free and confidential search for a whole of market financial adviser, visit www.unbiased.co.uk.”

 

ENDS

[1] Based upon a pension pot of £100,000, AXA Life Invest has estimated the total increase as a result of saving an additional £98 per month from 40 to 65 years of age. This assumption accounts for a fund management charge of 0.5% per annum and contract management charges, tax relief of 20% and investment growth of 5% per annum. The assumption is based on a range of annuities, details of which can be found here.

[2] Sample size consists of 213 UK savers aged 40 and over who have sought advice on their retirement planning, taken from an overall sample of 1,486 pre-retirees. Research conducted by Opinium Research in July 2014.

[3] FCA projection rates can be found here.

[4] Sample size consists of 1,486 pre-retirees, of which 444 have sought advice on their retirement planning and 997 have not sought advice. Research conducted by Opinium Research in July 2014.

[5] unbiased.co.uk surveyed 217 advisers in July 2014.


For more information please contact:

Clare Murphy-McGreevey, Account Director, H+K Strategies
0207 413 3155, [email protected]

Mike McManus, Senior Account Executive, H+K Strategies
0207 413 3512, [email protected]

Sarah Tye / Kate Aitchison / Frederica Saunders, Lansons:
020 7294 3682, [email protected]


About unbiased.co.uk, the professional advice website:

unbiased.co.uk is the UK's most comprehensive free professional adviser search website, focused on empowering users with the resources they need to make better informed financial and legal decisions. We not only help consumers and businesses find the best adviser for their needs from 24,000 IFAs, financial advisers, mortgage advisers, solicitors and accountants listed on our search, but we also help them research the market by providing relevant information and tools. At unbiased.co.uk we are transparent about what we do and provide the easiest way for consumers to find and compare advisers meeting their requirements.

The unbiased.co.uk website launched in 1998 and rapidly became the UK’s leading online destination for consumers and businesses looking to find an adviser. Now attracting over one million visitors a year, unbiased.co.uk is the default adviser directory for consumer websites recommending their audience to ‘find an adviser’.unbiased.co.uk has launched a new industry-facing website for the adviser community at business.unbiased.co.uk.

Unbiased Ltd promotes the benefits of financial and legal advice to consumers and businesses and would like to thank the following companies for their support:

Sponsors

 

Alliance Trust

NS&I

Aviva

Opinium Research

AXA Wealth

Prudential

Canada Life Ltd 

Royal London 

Legal & General

Santander Asset Management

Lockton

 Schroders

MetLife

Standard Life Assurance Limited

NEST

 

 

Unbiased Ltd - Registered Office: 12-14 Berry St, London, EC1V 0AU. Registered in England: No. 06775878.

For expert commentary or case studies from over 200 media-friendly advisers, journalists should visit unbiased.co.uk Bluebook - the media adviser directory
Twitter: @unbiased_co_uk
LinkedIn: unbiased.co.uk - online networking for professional advisers

About AXA Life Invest

AXA Life Europe Limited, trading as AXA Life Invest, is a fully-owned subsidiary of the AXA Group. Established in 2006, the company manufactures unit-linked guaranteed investment products for sale in the UK, France and other European markets. AXA Life Europe is headquartered in Dublin, Ireland and is authorised by the Central Bank of Ireland. In France, AXA Life Invest provides a range of unit-linked guaranteed investment products under the Secure AdvantageTM brand and has been operating on a cross-border basis in the UK since 2010.

The Secure AdvantageTM range of plans is underwritten by AXA Life Europe Limited, trading as AXA Life Invest. Whilst the Lifetime Income Benefit available under the Secure Advantage™ Plans guarantee an income for life, the value of the Plan is not guaranteed. The value of the Plan can fall as well as rise. We deduct a charge for providing the guarantees which will reduce the growth potential of the Plan. The guarantees provided under this Plan are provided only by AXA Life Invest. In the event that AXA Life Invest were to become insolvent the benefits from the Plan might be affected. Clients must be aged between 18 and 80 and have a minimum of £25,000 to invest in a Secure Advantage+ Plan. They must be aged 55 to start taking an income from the Plan.

AXA Life Europe Limited, trading as AXA Life Invest is authorised by the Central Bank of Ireland. Head Office: 3rd Floor, Guild House, Guild Street, Dublin 1, Ireland (No. 410727). Registered in Ireland under number 410727. Member of the AXA Group.

About AXA

AXA UK is a part of the AXA Group. The AXA Group is a worldwide leader in insurance and asset management serving 101 million clients. It is ranked the largest insurer in the world by net written premium and the top insurance brand globally.

In the UK AXA operates through a number of business units including: AXA Wealth; AXA Commercial Lines, AXA Personal Lines, AXA PPP healthcare, AXA Ireland and an independent distribution business Bluefin. AXA employs over 13,000 staff in the UK.

For full year 2011, IFRS revenues amounted to Euro 86.1 billion and IFRS underlying earnings to Euro 3.9 billion. AXA had Euro 1,079 billion in assets under management as of December 31, 2011. The AXA ordinary share is listed on compartment A of Euronext Paris under the ticker symbol CS (ISIN FR0000120628 – Bloomberg: CS FP – Reuters: AXAF.PA). AXA’s American Depositary Share is also quoted on the OTC QX platform under the ticker symbol AXAHY.

The AXA Group is included in the main international SRI indexes, such as Dow Jones Sustainability Index (DJSI) and FTSE4GOOD.

Category: Value of Advice Tagged: pensions, retirement


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