Choosing an annuity is probably the most important financial decision you will make for your retirement. However, a study by the Financial Times earlier this year found that over 60 per cent of annuity purchases were made without seeking any kind of professional financial advice.
As with many financial services products, annuities are highly complex. Specialist advisers have developed specifically in this area who understand the marketplace, individual needs and how to best match these two to their clients’ best advantage.
So, why would anybody purchase an annuity without seeking specialist advice? And how do you make sure that you get the best deal when looking for a pension annuity of your own?
There are plenty of reasons why people may choose to go it alone when planning for the investment of their retirement fund. Some of these may be a very valid, whilst others may prove to be based on unfounded fears about financial services and the way the sector operates.
There have been some recent high profile scandals that centre on the financial services industry. Exposes about the miss-selling of PPI, horror stories about insurance salesmen and tales of investments gone bad have understandably put people off from seeking advice.
In the past, financial advisers had a reputation as charlatans
The financial services sector has done much in the past few years to clean up its act and its reputation. Tighter controls and regulation along with transparency about earnings or contribute to a more trustworthy professional image. Clients of any financial adviser can now be assured that stringent controls are in place to ensure their adviser’s proper conduct.
Another common reason for people choosing to forgo financial advice is the cost of seeking such advice. The push for greater transparency in the operation of financial advisers has led to move from commission-based income to a fee-based system. This way, the client can see much more clearly how much the adviser is earning and for what. This transparency has led to an apparent increase in costs to the client and has put some people off seeking advice.
Financial advisers are highly trained and qualified in their field. Advisers specialising in annuities have undergone further specialist training and have a wealth of experience in guiding clients to find the right product for them. Seeking their advice when making probably the most important financial decision anyone can make in retirement makes a great deal of sense.
Crunching the numbers on your own can be hard work when you’re not in possession of all the facts
That doesn’t mean you should go with the first person you come across. As with anything, word of mouth, recommendations and testimonials can help you decide which adviser will be right for you. Choosing an adviser who is independent and has access to the annuities are offered by all companies in the UK will provide you with a much greater chance of securing the best value for the rest of your life than going with a single company or trying to wade through the morass of offers on your own.
When choosing your adviser, speak to them about their fees, their results in finding good value products for their other clients and get a feel for how they work. It is important that you feel comfortable and confident to place your future income in their hands before making a decision. That said, it makes much more sense to seek advice in this huge decision from an expert than it does to shun all guidance and do it all by yourself. Also undertake research online, annuities sites like https://retirementsecured.com/ offer a wealth of information.
The wariness of some people in seeking advice in finding the right annuity is understandable. However, finding the right adviser and being clear on what they offer will help remove some of the uncertainty and give you the best chance of securing the greatest income for your investment amount.
Image Credits: Mike Licht and Kentee Gardin