Phone-based advice will be 'essential' for drawdown clients

With concern that the average drawdown investment may fall by over a half when new pension freedoms come in next year, the ability for an adviser to provide a face-to-face service in a cost effective manner will be virtually impossible.

Traditionally, independent financial advisers prefer to give advice in person.  However, Portal Financial has pioneered telephone-based services in order to provide consistent service for clients regardless of the size of their pension fund, and the company believes this gives a better standard of customer service than face-to-face only.

Analysis of 2,000 drawdown clients with Portal Financial shows that the average amount currently invested in a drawdown contract is £53,300, with the average person taking £13,325 in tax-free cash. From April next year the average amount invested in drawdown may reduce even further.

Jamie Smith-Thompson, managing director of Portal Financial, comments:

"We always stress the importance of taking advice even to clients who want an annuity rather than income drawdown, so they can make the best decision for their circumstances. In order for this to be viable for clients, there must be provisions for it to be conducted on the phone and electronically.  Furthermore, many advisers increasingly need to use paraplanners to support them. Advisers’ time will need to be exclusively restricted to where they add value. For example, our paraplanners conduct telephone-based appointments to gather client information, which makes it easier for our advisers to make subsequent recommendations in our free, no-obligation pension review."