A “worrying number” of pension savers not planning to take financial advice could lead to a ‘mis-buying crisis’, LV= has warned.

According to new research, LV= found that 61 per cent of people approaching retirement say they don’t plan on using a professional financial adviser and over half, 52 per cent, think they can make the right decisions without advice.

While it has been a year since the Financial Advice Market Review published 28 recommendations to make financial advice more affordable and accessible, the take-up of advice is still considerable low.

Reasons for not taking financial advice include, not knowing the difference between guidance and advice, 33 per cent, while a further 23 per cent relying on their own research and 22 per cent thinking they don’t have the funds to make the advice worthwhile. Fifteen per cent said that advice is too expensive and just 22 per cent said they thought financial advice is good value for money.

In addition, 68 per cent of over 55s are completely unaware of the Pension Advice Allowance and 80 per cent don’t know about the tax break for employer arranged advice.

LV= has argued that these figures demonstrate the need for the government, regulators and the industry to make a greater effort to encourage the value of financial advice.

“The creation of a new single financial guidance body is an ideal opportunity to address this issue,” LV= said.

LV= head of policy Philip Brown said: “The poor understanding of financial advice is particularly worrying at a time when consumers are faced with more complex decisions about retirement than ever before. Taking financial advice is vital to ensure consumers are equipped to make the most of their hard-earned savings and get the income they need in retirement.

“Although the work on FAMR is set to address the advice needs of the mass market, not enough is being done to educate consumers about the value of advice… without further action to increase take up of advice we face a mis-buying crisis, and showing consumers why it is good value for money is a key part of this.”

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