Financial Advice Today, For A More Secure Tomorrow
The “Financial Lives” survey by the Financial Conduct Authority (FCA) makes for fascinating, if somewhat scary, reading. An in-depth investigation into the financial security of people across different age groups in the UK indicates the extent to which many of us are unprepared for the future, and are often in the dark when it comes to taking financial advice.
Work to a plan
Among a series of eye-opening statistics, the survey reveals that 31 per cent of UK adults have no private pension provision and will therefore be forced to rely on the state once they reach retirement age. At a time of widespread political uncertainty and instability, this should be of concern to us all, whether we are thinking about our own future or that of a loved one.
A bigger picture
The data gathered in the survey is based on almost 13,000 online and face to face interviews, and reveals an accurate portrait of the state of Britons’ finances.
The findings are used by the FCA to inform us of its consumer protection activities. “Financial Lives” particularly focuses on age, examining the extent to which people’s financial situations and attitudes develop as they get older. It therefore provides a very useful means of assessing the current pensions landscape and discovering where many people stand in relation to making provisions for the future. Worryingly, it reveals that 50 per cent of consumers (25.6 million people) can be considered financially vulnerable; this number rockets to 69 per cent for those aged 75 and over, and massive 77 per cent for the over-85s. These numbers demonstrate that financial vulnerability is clearly not an issue that only affects people struggling to make ends meet—it is something that can be seen across the income scale. And, in many cases it can be related not just to a direct lack of money, but to a lack of knowledge about how money should be best handled and invested. Vulnerability and insecurity are often the result of poor decisions and mistakes made at crucial points in the course of people’s financial lives.
Knowledge is power
One of the major contributing factors to hardship in later life—and the most easily avoidable—is many people’s poor understanding of their finances. An astonishing 46 per cent of UK adults claim to have little knowledge of financial matters, while two million people with defined contribution pensions say they have a little or no grasp of how their pension works.* Revealingly, when it comes to taking financial advice, many people don’t even know where to start. Among the 55-64 age group, almost three in ten (28 per cent) of people say they don’t know where to look for a financial advisor.
But it’s never too late to start. The benefits of taking professional financial advice speak for themselves: 50 per cent of people in the 55-64 age group say they would be willing to pay for financial advice; among those who have actually taken financial advice in the past year, that number shoots up to 80 per cent. Seeking advice today about getting your pension in order can save unnecessary financial hardship tomorrow.
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