The two words advice and guidance appear interchangeable, but they aren’t.
Earlier this year HM Treasury formally launched Pension Wise, its service to offer consumer guidance on the new pension rules. The standard 45 minute Pension Wise session will only tell you in general terms what you can do with your pension pot: it will not set out what you should do, given your personal circumstances. In other words, Pension Wise only offers guidance, not advice.
That difference is key, although sometimes the distinction between guidance and advice is not as obvious as in the case of Pension Wise.
Guidance may be all you need if you are confident that you can make your own financial decisions – and carry out the necessary reviews and adjustments as personal and external circumstances change. But are you that confident and, even if you are, do you have the time and are you that well organised?
The pension reforms that prompted the invention of Pension Wise are simply the latest in a stream of changes to pensions, with more already promised. With timely advice tailored to your own situation, you may be able to pre-empt the impact of the next set of revisions.
A do-it-yourself approach based on general guidance could possibly leave you worse off if you fall into a tax trap. At that point one of the other key distinctions between advice and anything else becomes all too clear. With advice you have regulatory protection governed by the Financial Conduct Authority (FCA). Retirement provision is a key component of your financial planning, and a complex one. We are here to help.
Occupational pension schemes are regulated by the Pensions Regulator. Tax laws can change. The FCA does not regulate tax advice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
