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9th November 2011

Defaqto survey indicates vital role of financial advisers

According to a survey by independent financial research company Defaqto, 36% of people seek professional advice to help them choose financial products. At the same time, Defaqto’s research found that 49% of respondents do not always understand product features, emphasising the importance of independent advice in helping people make appropriate financial decisions.
Defaqto’s survey of over 2,500 consumers involved in financial decision-making found that the number of people using professional advice (including an independent financial adviser) has increased by 11% in the last twelve months. And, although the survey indicated that 94% of people compare features when purchasing financial products, with nearly half of those surveyed not fully understanding the products they are considering there is a risk that people might buy inappropriate products.
In addition, Defaqto’s survey found that 75% of people feel confident choosing between some financial products, but would want to use a financial adviser for more complex products and areas, such as retirement planning.
In relation to pensions specifically, the research found that 23% of under 35s–and, within this, only 9% of 18-24 year olds and 35% of those aged 25-34 – currently have a pension. Coupled with the results of Defaqto’s 2010 pension survey, which found for example that only 11% of people are very confident that their pension will meet their retirement needs, this highlights the importance of financial planning to ensure people make appropriate decisions for their future.
Andy Leggett, Defaqto’s Insight Analyst for Wealth Management, said “It is important for people to plan for their financial future to ensure that their and their dependants’ needs will be met. One of the most important areas people need to think about is retirement planning. However, with fewer than 1 in every 4 under 35s having a pension our research indicates that many people are failing to plan at all for retirement. Furthermore, it shows they often struggle to understand financial products, particularly pensions.
“This highlights the importance of independent advice and information to support people in making the right decisions for their financial futures. We are delighted to be working with the Institute of Financial Planning (IFP -as a sponsor of Financial Planning Week 2011-to highlight the importance of financial planning to consumers.”
Nick Cann, ceo of the Institute of Financial Planning, said “It’s clear from Defaqto’s research and from research that the IFP has done that many Britons face an uncertain future because they’re not taking control of their finances. This is why it’s so important that initiatives like Financial Planning Week take place in order to provide the practical help that people so urgently need. By working together as a profession, to share the considerable expertise, tips, tools and information we have available, such as the broad range of guides and tools provided by Defaqto, I’m sure that we can help consumers take simple steps to improve their financial “fitness” as a result.”