I'll bet most clients of independent financial advisers (IFAs) have little or no idea of the patchy knowledge that their IFA has of the annuities market at retirement.
A survey commissioned by independent retirement specialist, Annuity Clearing House, of 275 leading IFAs currently engaged in advising retired or nearly retired people on pensions and annuities issues has revealed a potentially devastating lack of specialist knowledge of this complex sector - which could lead to people making disastrous decisions affecting their retirement income.
Less than half of the IFAs questioned admitted to having a thorough knowledge of the annuity market in general, while just one in three had good knowledge of the fast growing impaired annuity sector.
I don't think there is anything wrong with limited knowledge - after all, a generalist IFA is trying to cover a myriad of investments and other products at the same time. But leaving your retirement income decisions to the hands of a generalist is unwise - as many of your choices will be irreversible. The advice you get at retirement is crucial and so should be a specialist.
As ACH managing director Steve Hunt says: "Let's face it, you would not want your local GP to carry out major heart surgery on you - and neither would you want someone with little knowledge of a phenomenally complex annuity market to steer you into an arrangement you could be stuck with for 30 years."
The best defence against bad advice at retirement is to get a good idea of all the retirement income options and make sure that your adviser discusses these with you. For example, you can check current annuity rates from a range of providers at the Financial Services Authority's website: http://www.fsa.gov.uk/tables/bespoke/Annuities.
Also, consider if you need a different source of advice. A professional adviser will admit where his or her knowledge is limited. Larger IFA firms will refer clients to a specialist retirement income department within the firm, while some generalist IFAs, admitting their knowledge is patchy, will refer clients to a specialist retirement income advisory firm. Such specialist 'at retirement' services include: www.annuitydirect.co.uk, www.annuity-bureau.co.uk and www.williamburrows.com. The websites of these companies have plenty of useful information for you to peruse.
