Research into the retirement habits of the self-employed reveals advisers are seen in a negative light.
A report ‘Self-employment and retirement’ carried out for the Department for Work and Pensions (DWP) by independent researchers reveal the self-employed tend to turn mainly to friends, family, colleagues and advisers, with a few using institutions such as banks or DWP websites and helplines.
But the 120-page report says financial advisers, although it is not known whether these were independent, tied or multi-tied, attracted a deal of comment both from people who had used them - or were still using them - and from those who had not had any contact.
It says while a few of the 40 respondents - all over the age of 40 - had valued advice given in the past and had positive views about using advisers in the future, others were far more negative in their assessments.
And the report, produced by the Social Policy Research Unit at the University of York, claims many in the study group believed they had received poor advice in the past from financial advisers about paying money into endowment schemes, Peps, Isas and personal pension schemes.
Although the report points out most of these views are linked to bad experiences of under-performing schemes or schemes which collapsed, many of which happened in the 1990s, it says they have left people who are self-employed with negative feelings about advisers which seem to be very long-lasting.
In addition, the report suggests one bad experience is enough to cause people to reject the possibility of using a financial adviser in the future, as there was a perception among respondents advisers are not impartial or independent and are only interested in selling them particular financial products.
Members of the study group also argued advisers could not be trusted to have their individual interests at heart, although others who seemed less sceptical or who had received satisfactory advice in the past appeared willing to use an adviser in the future.
The report meanwhile reveals most of the respondents use the services of accountants and spoke positively about their relationship with them, suggesting a high level of trust which the report claims comes from the view they were acting in an individual’s personal interests and in the interests of their business.
However, few people admitted asking for savings and pensions advice from institutions such as banks and insurance companies as some did not consider them to be impartial enough for advice, although family members, friends and other close colleagues are mentioned as trusted sources of advice, particularly if they are employed in some financial or business capacity.
The DWP says the report was commissioned to try and increase understanding of how self-employed people plan financially for their retirement and how they make decisions about saving for the future.
In addition, the research says knowledge of pensions among respondents was “patchy” with low levels of knowledge on the state and personal pensions along with very little understanding of how tax relief works.
However, the document reveals although many self-employed have faith in ‘bricks and mortar’ as a safe way of investing money, financial products such as Isas, building society accounts and stocks and shares are not seen as major sources of income after retirement.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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