Upcoming changes to the minimum retirement age mean financial advice will be under extra scrutiny, IFA Almary Green warns.
Managing director Carl Lamb says advisers will need to "strike a balance" between warning against taking early pension release and recommending it, ahead of the change in retirement age from 50 to 55 in April.
"This has all the hallmarks of an issue that could come back to haunt us if we don't take the right steps now," Lamb says.
Almary Green has warned its clients taking advantage of early pension release could lead to a "dramatically reduced" retirement income.
The warning - in the form of a letter sent to nearly 700 affected clients - was prompted by concerns some clients could misinterpret information sent to them by pension providers informing them of the legislative change.
"Clients are going to get a letter from their pension provider basically giving them the chance to get their hands on several thousand or even tens of thousands of pounds worth of tax-free cash," Lamb says.
"There is a clear danger some might view the information as a call to action and be tempted to proceed without carefully thinking through the long-term consequences."
Lamb thinks IFAs have a key role to play in warning clients of the potential dangers and ensuring they are aware of all their options.
"We need to strike a balance, on the one hand warning people that unlocking a pension early will mean their retirement income will probably be far less than they could have expected if they'd waited until their normal retirement date, and on the other treating them fairly by highlighting their options so that the minority who might benefit don't miss out."
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