More than two in five financial advisers (43%) say the increased pension flexibility brought about by the Pension Freedoms is confusing clients, according to a new report.

A similar number (41%) of advisers told financial strength ratings specialist AKG that the Pension Freedoms, introduced in 2015, have also increased the risk of retirees exhausting their funds.

Despite 43% of advisers believing clients are confused by the broader range of retirement options, 51% still viewed the introduction of greater flexibility as a positive development for their clients over the past decade.

Consumers surveyed for the AKG report also had concerns about the freedoms. Close to half (44%) said retirement planning had become more confusing since the Pension Freedoms were introduced.

Two thirds (71%) of the consumers surveyed for the report said they valued the ability to access pensions flexibly, but 45% shared worries that having flexibility means they may run out of money in retirement.

Two thirds (59%) of the pension savers said they were actively trying to balance investment risk with their income needs in retirement.

The report also highlighted a sharp divide between advised and unadvised pension savers, as well as a growing advice gap. Only 29% of consumers said they would turn to a financial adviser for support and just 20% said they were willing to pay for financial advice.

Warren Bright, head of retail intermediary distribution at Standard Life, who co-sponsored the report, said the findings highlighted the need for the introduction of targeted support.

He said: “The role of advisers has never been more important for society with full financial advice remaining the gold standard. However, if we want to continue revolutionising people’s retirement prospects across the next decade, we need collaboration between government, regulators, providers and advisers to take positive steps towards helping more people when it comes to making major financial decisions around retirement.

“We know that many are unwilling or unable to seek advice and addressing adequacy and access are key. The ongoing consultation on targeted support, if implemented properly, has the potential to address the balance where worryingly 90% of people are making retirement decisions unsupported.”

In February advisers warned the FCA that its proposed introduction of targeted support under the dvice Guidance Boundary Review could cause significant consumer harm if the difference between guidance and advice was not more clearly defined.

The FCA consultation on targeted support is focused on helping consumers understand their choices around pensions and if it could help close the advice gap.

• Opinium Research surveyed 2,000 UK pension savers in March on behalf of AKG. Pureprofile surveyed 100 financial adviser on behalf of AKG on 19 March.

The paper Ten Years of Freedoms – Lessons, Gaps, and the Road Ahead can be downloaded in full from the AKG website.  

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