The number of people choosing to take regulated advice when entering drawdown has fallen, with more than a third of savers going it alone in the half year to March, according to FCA data.
The regulator's latest data on the retirement income market, published today (April 16), showed between October 2022 and March 2023, 43,366 pots entered into drawdown with no advice or guidance, equivalent to 39.1 per cent.
There continues to be a trend of less people taking advice when entering drawdown as, between October 2021 and March 2022, 34,737 pots entered drawdown without advice, and between April and September 2022, 36,426 pots didn’t receive advice.
This lack of advice was particularly prevalent among lower valued pots as 27,037 of the pots that were non-advised were worth less than £50,000.
In contrast, 16,329 of non-advised pots were worth £50,000 or more.
While the number of people taking advice before going into drawdown has fallen, there are still more pots getting advice rather than seeking guidance or not taking any advice at all.
The statistics showed, in total, between October 2022 and March 2023, 58,584 pots took advice (52.8 per cent) compared to the 8,932 (8.1 per cent) which received guidance and the 43,366 (39.1 per cent) which took no advice.
However, this represented a fall on both a yearly and bi-yearly basis, as pots accessed with regulated advice stood at 59,396 in March 2022 and 62,102 in September 2022.
In contrast to those who did not receive advice, higher valued pots were found to be more likely to receive advice when entering drawdown.
Some 37,238 pots which entered drawdown were worth more than £50,000, while 10,899 pots were worth £250,000 or more.
Conversely, just 21,346 pots with a value of less than £50,000 took advice, including 4,322 which were worth less than £10,000.
Annuities
Thee increased prevalence of pots lacking advice was not uniform across all forms of access as those buying annuities showed a preference for advice.
Between October 2022 and March 2023, 16,118 annuities were sold with no advice or guidance, less than the 17,626 annuities that were sold without advice between April and September 2022.
At the same time, the number of advised annuity sales increased, rising from 5,954 to 8,261.
However, this did not represent an increase on a yearly basis as 11,835 annuities were sold without advice between October 2021 and March 2022.
Canada Life retirement income director, Nick Flynn, stated it is “really disappointing” to see inertia continue to play a big role in retirement income decisions.
He added that there are “far too many people” not exercising their right to shop around for, not only the best rate, but also the right shape of annuity for their individual circumstances.
He said: “Improving the availability of guidance and encouraging more people to seek the help of an annuity broker or independent financial adviser, rather than simply accept the status-quo from their pension provider, will provide better lifetime consumer outcomes.”
tom.dunstan@ft.com
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