Choice and flexibility for accessing pensions in the UK have increased, which means responsibility and risk have also. Because of this, a lot of people are considering whether they should hire a financial advisor for their pension, rather than managing it themselves. 

Most people have access to a state pension, however, if you have multiple pensions that are based on investments, it could be a wise move to hire a financial advisor.

A financial advisor can’t predict the future when it comes to investing, but they are trained to take into account everything that makes long-term financial planning so complex. 

So, do I need a financial advisor for my pension? Oakworth Financial Planning explores why you might need a financial advisor to help you with your pension and why it’s a good idea. 

What can Financial Advisors Help With?

Financial advisors can help you plan for your future to meet your goals and aspirations over your lifetime. It’s a continuous process of anticipating and adapting to changes that occur over a long period of time. 

This is the same for independent financial advisors who specialise in pension planning. They are able to adapt to changing financial plans, whether they can be controlled or not.

Everyone is different, and so are their circumstances. So whether you need a financial advisor and how long for, will differ from when someone else needs one. Sometimes, people will seek one-off advice to set up a scheme, and others will need ongoing advice.

The main aspects that specialist pension financial advisors can help with are: 

  • Manage the risk.
  • Keep track of goals through continual cash flow modelling.
  • Choose diversified investments.
  • Avoid biases and expenses mistakes.
  • Access your money tax-efficiently.
  • Keep updated on pension rule changes.

Why You Might Need a Financial Advisor for Your Pension

On average, retirement is likely to last over 30 years. This means you’re faced with having to manage and invest a large pot of money that you can’t afford to let deteriorate too quickly. It’s about trying to find the balance between taking enough out without taking too much and running out. 

But if you don’t know where to start, there are many reasons why you may decide to employ a financial advisor to help with your pension.

  • When you’re looking to retire.
  • When you plan to use flexi-access drawdown.
  • If you’re inexperienced at investing large sums of money.
  • You want to maximise returns on your money.
  • You want to understand how to access your cash tax-efficiently.
  • To reduce investment risk.
  • If you want to consolidate multiple pension pots to make things easier to manage.

Protecting Your Pension Against Inflation

Over long periods of time, it is important to insulate yourself from the effects of inflation if you’re managing your money. This is because, as inflation goes up, the value of your money can go down. It’s easy to ignore the odd 1 or 2%, but when combined with over 30 years of retirement, your pension pot could be worth less than you thought. 

Protecting your pension from inflation is one thing a financial advisor can help you with. They can advise on how much you can afford to take from your pension without using it all up too early. They will also be able to help you understand the most suitable investments for your appetite for risk. 

Managing Investment Risk

Not all investments for your pensions carry the same level of risk. There’s a fine line between the potential returns and the amount of risk you take. It’s a careful balancing act to maximise your returns, whilst being mindful of exposure to risk. 

Having a financial advisor by your side means that you can outline how much risk you are comfortable with. Then they can invest your money accordingly. Further down the line, they will be able to adapt your investments as and when changes occur. 

Managing your Money Tax Efficiently

Managing your money tax efficiently can come with challenges as you get older. You will be able to access a defined contribution pension flexibility from the age of 55. This also means that you have access to 25% of your pension pot as tax-free cash. Having a financial advisor means that they will help you access your money in the most tax-efficient way.

Do I Need a Financial Advisor to Drawdown my Pension?

Check if your pension allows drawdown and if it does, you might not need a financial advisor. All you need to do is let the pension company know that you want to drawdown. 

Although, we do believe seeking advice from a financial advisor is preferable to make sure you understand how much is a sustainable amount to withdraw from your pension pot. 

When You Might Need a Financial Advisor for Drawdown

If you are planning to use flexible drawdown in retirement, you might want to consider getting a financial advisor to help you access your pension. 

Newer pensions schemes allow you to flexibly access your pension, whereas some older schemes don’t have the technology to do this. 

You might want to consider transferring your pension to a new provider, and a financial advisor can: 

  1. Check you aren’t giving up any valuable benefits. 
  2. Help you move your pension. 
  3. Find the best pension for you. 
  4. Make sure you avoid risky investments. 
  5. Help you build a sustainable withdrawal plan.

The Pros Of Using a Financial Advisor For Your Pension

The first thing you may think of when weighing up whether to hire a professional financial advisor for your pension is the cost and whether it’s worth it. 

Oakworth Financial Planning believes it is, and we pride ourselves on helping thousands of happy customers over the years. 

1. Expert Advice

Financial advisors are experts and undergo rigorous training before they are qualified. On top of this training, they continually update their knowledge to stay up to date with the latest regulations, putting your best interest at heart. 

2. Protection

Financial advisors follow strict industry standards by the Financial Conduct Authority (FCA). As a consumer, you are protected against ‘bad’ advice by the Financial Ombudsman. They will investigate any wrongdoings on your behalf. This is why it’s so important that you seek advice from a regulated Financial Advisor and invest in regulated financial schemes.

3. They Offer Unbiased Advice 

A financial advisor is trained to be less emotionally attached to making decisions around money. They are trained to opt for rational behaviours that will support your long-term wealth.

4. Access to Industry Research & Analytics 

Financial advisors have access to a much wider range of research and data than the average self-investor. Rather than getting their information from one source, financial advisors paint a balanced picture from all the information they have available to them.

5. Goals Are The Focus

It’s a common misconception that financial advisors only talk about money and investments. When, in fact, they find your lifestyle goals more important and want to help you achieve them.

How Much Does Pension Advice Cost?

Pension advice from an independent financial advisor costs vary. This is because how much you pay depends on which advisor you choose and whether you seek one-off advice or ongoing advice. 

So, Do You Need a Financial Advisor For Your Pension? 

If you’ve decided that you do need a financial advisor for your pension and are ready to discuss, choose Oakworth Financial Planning. 

We aim to provide you with valuable advice and peace of mind that you are on the right track with your pension. We can help make certain that you are not paying too much in your pension charges and that your pensions are tailored to you.

Furthermore, we will most importantly, discuss your specific goals in a relaxed atmosphere which allows us to discover what strategy would be right for you to create a long and enjoyable retirement.

Get in touch today to discuss how our financial advice services can benefit you and your future income.