People's confidence in their retirement savings is barely affected by having taken advice, research from Nucleus Financial Platforms has revealed.

Having conducted research of over 2,200 UK savers with the help of YouGov, Nucleus Financial Platforms found that advice does not appear to have a material impact on the confidence people have in their pensions when approaching, or in retirement.

In its first UK Retirement Confidence Index report, Nucleus Financial Platforms said the average scale of confidence for advised savers in this cohort is 7.0 on its index, and 6.8 for those who have not received any advice at all. On the index, 10 is a "totally confident" score, while 0 is a "not at all confident" score.

The research also found the average scores moved out slightly depending on whether or not people had accessed their pension savings — but not in the manner that many would expect.

Savers who had taken no financial advice and accessed pension funds have an overall confidence score of 7.3, while those who have had advice and tapped into their retirement pots have a score of 7.1, making the former group the most confident of all the respondents to the research.

Nucleus Financial Platforms said there are several possible explanations for the "curious finding".

The report suggested that one reason may be that individuals put time and effort into their decision to access funds and feel informed and engaged as a result. Another may be that they are locked into a favourable annuity rate. There is also the danger that people are over-confident about their retirement savings and plans.

"They may be accessing retirement savings because they’re confident to do so, rather than it being a consequence," the report explained.

"This was identified as a common occurrence by our advice professionals. As was the very real likelihood that, in many cases, this confidence may be misplaced. Wealthier non-advised clients tend to feel confident, which may have more to do with a general sense of ease about money and not worrying about debt."

This latter reason was backed up by the research, which found that retirement confidence is strongest (around 8.0) among those with household wealth of £35,000 to £99,999 in either cash savings, investable assets, pension pots or entitlements, who have accessed their funds.

When it comes to investment risk, Nucleus Financial Platforms found that savers who have had some advice are willing to take on a little more risk than those who have not.

The overall tendency across respondents' responses is to take a very low level of risk when investing for retirement, with a mean score of 3.2 out of 10. There is a slightly higher risk appetite where respondents have taken advice, at 3.6, compared to 2.8 for non-advised savers.

Those who have taken advice and accessed their pension funds fall in between at 3.4.

Those who have received financial advice but not yet accessed their pension fund show the highest mean risk appetite at 3.9. One suggestion for this, according to the report, is an understanding of the long-term nature of investing, which would have been explained to them by a financial adviser.

In addition, while those who have accessed their pension funds without advice have the highest confidence score overall, they score lowest on the investment risk measure (2.6).

One possible explanation is that this may reflect a lack of comfort, or even familiarity, with
investing, the report said.

The report also said that planning significantly affects confidence. Just over half of respondents (51 percent) have a detailed plan for retirement. Those who have their plan in writing — 20 percent of respondents — have a confidence score of 8.1.

Those who do not have a plan on paper still had a high confidence score of 8.0. Those without a detailed plan, however, had the lowest confidence (4.6).

“Among the many interesting findings, the stand-out piece of data for me is that advice itself does not necessarily lead to more confidence, but planning absolutely does," said Nucleus technical services director Andrew Tully.

"What that tells me is that we should all perhaps be looking at the advice gap from a different angle. If we focus on taking actions that lead people to engaging with the planning process, advice, and implementation of products, if required, will naturally follow. That for me is a new way of looking at the problem of engagement.”

He added that it was pleasing to see people saying they are more confident than Nucleus anticipated, but caution was needed for two reasons.

"The first is that confidence does not necessarily equate to people making the best decisions when it comes to pension planning. So, we would always encourage people to seek out professional help if they can," he continued.

“And the second reason for caution is that we believe retirement confidence is very likely to reduce over time due to dwindling numbers of defined benefit arrangements and an increase in reliance on inadequately funded defined contribution plans."

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