Are you making use of the Pension Advice Allowance?

By AdviceBridge

Pensions are one of the most difficult financial products for people to understand. With strict rules around tax relief and employer and employee contributions, there’s plenty of scope for financial advisers and planners to add value and remove costly mistakes and misunderstandings.

And this is before you consider the best place for pension savings and how advice can help people ensure that their money is working as hard as they are.

As we all know, good advice comes at a price, which is where the Pension Advice Allowance comes in.

A scheme that helps encourage people to take advice on their retirement savings

The Pension Advice Allowance is a scheme that allows employers to assist their staff to acquire financial advice. 

Since Pension Freedoms legislation was introduced in 2017, pension savers from some workplace pension schemes have been able to take £500 from their pension pot to pay for retirement advice. 

The payment is made directly by the pension provider and allows members to use money from their pension without incurring an unauthorised payment tax charge.

The allowance was specifically designed to allow individuals of any age to gain access to advice and information relating to their pensions and retirement plans. Pension savers can make use of the allowance three times during their lifetime (once in any tax year), allowing savers to take advice at different stages of their life, which is perfectly suited to retirement planning.

As a useful way to encourage people to take advice on their retirement savings, it’s surprising that there are low levels of demand for the Pension Advice Allowance.

Advice you can provide under the Pension Advice Allowance

While the allowance naturally allows you to provide information and advice surrounding an individual’s pension arrangements, wider, more holistic financial planning is also permitted. 

You simply have to make sure that you provide reference to their pension arrangements and retirement planning, which is inevitable for any decent financial planner.

Usefully, providers who facilitate the Pension Advice Allowance payment pay the financial adviser that the member has chosen to take advice from directly, so you don’t even have the hassle of worrying that you’ll be paid for your time.

11 million people are looking for some form of financial planning advice

There’s a market of around 11 million people who are looking for some form of planning service, many of them saving into workplace pensions. 

With so many complex choices about how to invest or drawdown on their pension savings, the need to offer support to these people and help them make the right decision is more important than ever.

The problem is, even with the Pension Advice Allowance, some people could struggle to meet the cost of professional advice. Indeed, according to NextWealth, the average cost of onboarding a new client is £1,543. 

For someone who wants to get more information and advice about how to save effectively for their retirement this sum could be hugely off-putting. Plus, even with the £500 from Pension Advice Allowance, the price could still remain prohibitive for many.

Where AdviceBridge comes in

AdviceBridge enables firms to reduce onboarding costs from £1,543 to under £500.

For someone who couldn’t afford £500 for advice, an adviser using AdviceBridge could offer them advice for £500. The Pension Advice Allowance would cover this, meaning that the client effectively receives free advice.

How does AdviceBridge cut costs?

Using AdviceBridge, you can cut the time spent onboarding a new client down from the typical 25 to 35 hours to under 5 hours (including meetings). This is a substantial saving, typically of between 70% and 80% of the time it would usually take, and, of course, the time saved makes onboarding cheaper, too.

The intelligent platform enables you to effortlessly deliver financial plans to a much wider range of clients profitably. 

Because AdviceBridge digitises many of the manual, time-consuming processes, engaging your clients through its simple and meaningful interface, you have more time to focus on the important business of building client relations, instead of admin, research, or reports.

Get in touch

To find out more how AdviceBridge can help you take advantage of the Pension Advice Allowance and deliver affordable advice to more clients, please get in touch. Email hello@advicebridge.com, book a demo, or call us on 020 3925 3850.