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Covid sends Brits in search of pension advice they can trust

Updated 07 December 2022

7min read

Nick Green
Financial Journalist

The pandemic has increased people’s demand for pension advice they can rely on, according to new Unbiased data. But with many still suspicious of advice, how can you tell the difference between a genuine financial adviser and salesperson? Article by Nick Green.

How to find a genuine financial adviser

2020 was the year of ‘I just don’t know anymore.’ Certainties that we’d all taken for granted were suddenly all up in the air. We saw it in every walk of life – and we also saw it, strikingly, in the way people sought independent advice on their pensions.

Millions use Unbiased every year to read free guidance about their finances or search for impartial professionals to help them. And as we pass the anniversary of the first Covid lockdown, we can look back and see how the pandemic changed people’ financial advice needs.

Previously, most people seeking a pension adviser would enquire about a specific service or product type. The top searches in 2019 were for pension transfer, pension review, pension drawdown and pension consolidation. People can also search simply for ‘pension & retirement planning’ if they aren’t sure what they want, but in 2019 this enquiry was relatively unpopular, ranking eighth in the list.

But in the 12 months from March 2020, searches for ‘pensions & retirement’ planning increased by a massive 65%, overtaking all the others to become the most popular financial advice enquiry. Why? One explanation is that where people previously approached their IFA with a general plan in mind, now they had little idea of what to do with their pension. What they needed now was simply to place their trust in an expert who could give them a steer at this bewildering and stressful time.

‘People need an expert opinion they can trust’

Kay Mechial, financial adviser of Black Lion Wealth, was among those who saw this change happening in real time. He found that people who contacted him had an increasing need just to talk and discuss their finances, and to seek out an expert opinion that they could trust.

Kay reveals, ‘Our experience over the pandemic is that people are more willing to seek out and receive good quality financial advice. We’ve seen almost 50% more interest compared to the year before Covid, which suggests to us that there was a real need to speak to an adviser among many people, as well as commitment to tackle their financial concerns.’

In particular, Kay and his colleagues have seen an increase in the number of people anxious to check their pension savings or find the best ways to access them. He adds, ‘I think the most important trend we found was the clients who were new to financial advice, and initially felt that they’d been forced by circumstances to do this, but who ended up enjoying the process while picking up some fantastic value along the way.’

Kay is convinced that trust plays a crucial role in the advice process. He found that, initially, a lot of people didn’t have a clear idea about what advice they wanted, and simply wanted a chance to discuss their finances with an expert. He is generally happy to do this, as when large sums of money are concerned, people need to feel fully confident that their adviser knows them and understands their needs fully. Once that is achieved, the adviser can earn their trust and start to provide the advice that person needs.

‘People’s general financial knowledge has significantly improved over the years,’ he says. ‘We are now almost facilitators and consultants rather than simply a means to an end transaction.’

UK public still wary of financial advice

Unfortunately, many individuals with a real need for financial advice are still missing out on it. Awareness of financial advice in the UK is still relatively low – just 38% of adults say have seen an IFA in their entire lifetime, according to a new report by My Pension Expert. But an even more concerning finding of the report is that 57% of people ‘don’t trust’ financial advisers – rising to 65% among the over-55s. Meanwhile 75% of respondents considered that financial advice is too expensive, and as many (76%) said they were confident enough to make their own financial decisions. One in five people (18%) said they had lost money as a result of following a financial adviser’s recommendations.

Taken at face value, these would be damning statistics. But examined more closely, they reveal something more interesting, and even more concerning. For instance, if 57% of people don’t trust IFAs, but only 38% have ever seen one, then a high proportion must be basing their mistrust not on personal experience but on what they’ve heard or read. Their sources may therefore not be reliable.

A yet more dubious figure is the claim that 18% of people have lost money as a result of seeing an IFA. If only 38% of people have seen an IFA at all, then this implies that nearly half – 47% – of all IFA consultations result in a loss of money. This would make financial advice no better than flipping a coin. And given that a regulated IFA is obliged to restore a client’s original financial position if their advice results in a client becoming worse off, this massive loss rate would have destroyed the advice industry years ago, if it were true. Which means it can’t possibly be true. And this suggests that many of those people who thought they were seeing regulated financial advisers… actually weren’t.

When is an ‘adviser’ not an adviser?

This theory is reinforced by another finding of the report, which is that 26% of people said they had faced pressure selling tactics from their ‘financial adviser’, pushing them into buying a financial product without fully understanding what it was. This is a huge red flag. An independent financial adviser is unaffiliated to product providers and has nothing to gain by pressure selling (and everything to lose), so it’s likely that these unfortunate individuals simply assumed they were receiving financial advice, when in reality they were just talking to a salesperson.

Many banks and financial product providers may deploy customer-facing staff who offer to guide customers on their options. Sometimes these staff may even be called ‘advisers’. However, although they may provide useful information about the products, they are not unbiased, as it is ultimately in their interests to sell their products and no-one else’s.

Equally commonplace is the ‘recommendation from a friend’, where someone who may have enjoyed some investment success encourages their friend to use the same ‘adviser’. The individual may then assume they are using a regulated financial adviser, but never get round to checking. If the ‘adviser’ is actually just an unregulated lone wolf who once made some lucky stock recommendations, the clients will only find out the hard way when the luck eventually runs out, and they have no claim for compensation.

People are therefore right to be wary, when so many individuals who make seem to be genuine advisers actually aren’t. But there are simple ways to be sure that you have found the real deal.

How to be sure of finding a genuine regulated financial adviser

Here are some simple tips to follow, to be sure of finding a regulated IFA or whole-of-market financial adviser who will act in your best interests.

  1. Check their FCA’s Financial Service Register
    All genuine regulated advisers will be listed on the FCA’s Financial Services Register. Ask for your adviser’s FCA number (or enter their name or firm name if you can’t get hold of it immediately) and enter it on the FCA website. If they don’t appear, don’t use them.
  2. Find your adviser through a reputable directory
    A reputable financial advice directory such as Unbiased will ensure that all advisers listed are regulated by the FCA. Unbiased also checks that all its advisers can advise on the whole of the market and are not tied to particular product providers. Advisers who are ‘tied’ to certain providers cannot list with Unbiased.
  3. Get automatically matched with a suitable adviser
    Unbiased also provides an automated matching service that finds you the most suitable financial adviser for your needs. In this way you can be sure in advance that the adviser is regulated, whole-of-market, and unbiased.
  4. Ask to see your adviser’s qualifications and accreditations
    A properly qualified adviser will be delighted to show you their certificates to prove that they are fully able to advise you in the relevant areas. You can find out what each qualification means at our qualifications page.
  5. Ask about advice fees at your first meeting (which should be free)
    All IFAs must have fully transparent fee structures, so you can see exactly what you’ll be charged for, how much you’ll be charged, and why. A genuine adviser will be happy to discuss these in detail at your free first meeting. You can also ask about the benefit you can expect to receive as a result of receiving advice. After all, the whole point of financial advice is to end up financially better off.

Signs than an adviser may not be genuine

Here are the warning flags to watch out for, which may indicate that a ‘financial adviser’ is not actually what they seem.

  1. They work for a financial institution, such as a bank
    Unless the banks specifically confirms that it is putting you in touch with an IFA who is completely independent from them, assume that any person connected to your bank is not unbiased. This doesn’t mean they can’t tell you useful information – just don’t mistake this information for advice, and don’t make big decisions solely off the back of it.
  2. They cold-call (or cold-email) you
    A genuine IFA will not contact you out of the blue to try and get your custom. If anyone tries this, they are at best unreliable and at worst trying to scam you. If you find your IFA through the Unbiased matching service, note down their details carefully, so that when the adviser calls you, you can confirm it really is them and not a cold call.
  3. They put pressure on you to use a particular product
    If you get any sense that you are being hurried into a decision, take a step back. Typical signs are promises of investments that will ‘go’ unless you grab them today. Genuine financial advice is quite boring – it doesn’t exist in a world of tight deadlines and fleeting opportunities. If you’re not being offered time to think about it, then it’s not advice but salesmanship. With an IFA you always have the option to say no – in fact, they are more likely to talk you out of a decision (such as a pension transfer) than into one.
  4. They offer ‘free advice’
    Although many people may grumble about advice fees, these are actually one of the key safeguards. Since 2012 advisers have been require to be transparent about how they make their income. If a service appears to be free, that only means the adviser is getting their money from a commission of some sort. The fees you pay to an IFA are to ensure that they work for you and act in your best interests. In short, if advice seems free, it isn’t really advice (and probably isn’t really free, since you’ll end up paying for it another way).

You can find an unbiased financial adviser using the Unbiased search tool below.

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About the author
Nick Green is a financial journalist writing for Unbiased.co.uk, the site that has helped over 10 million people find financial, business and legal advice. Nick has been writing professionally on money and business topics for over 15 years, and has previously written for leading accountancy firms PKF and BDO.