Over-50s think they need a £500K windfall to make financial advice worthwhile

26 November, 2018Heather Tilston

Calculator and moneyOnly half (53%) of Britain’s over-50s feel well prepared for retirement, and four out of ten (38%) worry about it, but it would take a windfall of over half a million pounds before most would call in a financial adviser.

The findings emerge from the latest joint research by ourselves and Seven Investment Management (7IM).

Of those shunning professional advice, nearly half (47%) think they can look after their own money, 28% say they don’t have enough to justify an adviser and a similar amount (28%) think the costs are too high. One in five (19%) say it doesn’t matter how much they inherit ­– they would never consider getting financial advice.
Women are more reluctant than men to consult an IFA ­– the advice tipping point for most men is just under £499,171, but it is £544,249 for most women (25% of women said they hold stocks and shares outside of an ISA or SIPP, compared with 40% of men).

Our dean Peter Hahn said: “Statistically a 50-year old Briton is expected to live to age 81 so they’ll have to fund a minimum of 14 years in retirement. That means having a long-term investment strategy with less inflation-exposed cash, a balance many may not be confident about. So while over-50s say they feel well prepared, these findings suggest a poor understanding of long-term risk and reward, risking poorer retirements. And you don’t need a £500k ‘windfall’ to make advice worthwhile. Advice can be really helpful in all sorts of circumstances and with much smaller ‘pots’ of money and assets.”

Regrets, we have a few

In the detailed annual survey of over 2,000 UK adults aged 50 or over (each with at least £50,000 in assets), nearly half (48%) who are yet to retire say they need to save more for retirement.

Asked what they would do differently if they had their time again, 60% of over 50s would start investing earlier, 58% would save for retirement earlier, 30% say they’d spend less and 33% would get on the property ladder sooner. When it comes to children, 18% wish they’d had children earlier and 8% wish they’d given children less (though 24% would give their children more financial support). Only 11% would spend more.

Just over a third (34%) of pre-retirees say they will have to work longer than planned so they can afford to retire – on average more than seven years longer than they expected when they set out on their careers.

Michael Martin, Private Client Manager, 7IM, said: “This is the first generation that’s really having to confront the double whammy of longevity and diminished pension returns and for some it’s proving painful. They started out their careers dreaming of packing in at around 60. Many now face going till they’re 70, and often longer. There are a number of steps savers should consider to address this problem and one of them is taking a sensible amount of investment risk. Good advice can make a big difference in helping you work out what ‘sensible’ means in your circumstances and where best to invest to generate the returns you need. They can also give you a proper plan – so you don’t reach retirement age with only debts and regrets.”

Brexit driving more to cash

With more than half (56%) thinking the UK economy will deteriorate next year – and the wealthier they are, the gloomier they feel. Brexit has led to different decisions being made by one in ten (11%): of these over a quarter (28%) have opted to invest more in cash and 21% to invest more in international stocks and shares. Maybe because they are so heavily invested in cash, most over-50s think they are cushioned against the potential effects of Brexit – only one in five (20%) think their own situation will deteriorate.

About the research approach

  • Opinium surveyed 2,000 UK adults aged over 50, with assets of more than £50,000 (including property and pensions).
  • Participants were recruited via a random sampling method to help avoid selection bias, which was developed in conjunction with the London School of Economics. It takes into account various demographic variables (such as age, gender and region) to ensure that we had a representative sample of each demographic group in any sample we recruited.

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