The right for people to receive free and impartial guidance on how to make the most of their pension choices was granted by the Government when it made radical changes to how people could access their pensions in 2015. Access to web, phone and face-to-face guidance were all made available, funded by a levy on regulated financial services firms. This was aimed at improving people’s knowledge on how the retirement market works so that they could make informed decisions about their future retirement.
In a financial services context, there is a critical difference between the terms ‘Guidance’ and ‘Advice’, yet a poll conducted amongst people aged 55+ in August 2020 concluded that many can’t distinguish between the two.
For example, nearly a fifth of those questioned said they had received ‘advice’ from the Government’s Pension Wise service, even though the service clearly states on its website that it offers guidance only.
Perhaps more worrying is that about ten per cent of respondents considered chats with friends and family to be advice.
We all want to make the best decisions about our retirement and it’s natural to search the internet and to ask friends for their opinions. However, in a financial services context, the only ones who can offer advice are regulated individuals or firms, such as Brunsdon Financial Services Ltd.
In 2016, the Financial Advice Market Review, jointly led by HM Treasury and the Financial Conduct Authority, conducted some research to look into the confusion consumers face when understanding the terms ‘Guidance’ and ‘Advice’. Although ultimately it concluded that no new terms explained the two services better, the recommendation was that the market should provide a single consistent set of consumer-friendly explanations. These were suggested as follows:
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