In depth: report from Edinburgh-founded Nucleus Financial Platforms highlights need for more retirement planning advice

More than a dozen recommendations have been laid out to help improve people’s financial situation in their retirement, on the back of a new study billed as first of its kind showing gaps in planning by over 50s and related anxiety.

Edinburgh-founded Nucleus Financial Platforms has debuted its UK Retirement Confidence Index, compiled from a survey of more than 2,200 adults aged at least 50, examining how confident those approaching or in retirement feel about having enough money to live on for the rest of their lives – and finding that planning levels “significantly” affect confidence.

It has come up with an overall confidence index of 6.9 out of ten, saying this was higher than some might have predicted, but with some indication that underlying sentiment points to challenges ahead for some less confident than others, and amid broader concerns over under-saving for retirement.

The score also has a negative outlook, which is seen as mirroring the rapid decline of defined benefit pension provision and inadequate defined contribution savings pots, and “speaks to more general concerns about the cost of living for 80 per cent of respondents and inflation for 63 per cent”.

The report says its findings indicate that advised clients have a better or more informed attitude to risk. Picture: Getty Images/iStockphoto.

The independent adviser platform group said just over half of respondents reported having a detailed plan for retirement, and only 20 per cent have their plan in writing, but this “doesn’t seem to affect confidence”, with the respective indices coming in at 8.1 and 8. On the flipside, those without a detailed plan were discovered to have the lowest confidence, with a reading of 4.6, and just under half of UK adults approaching retirement said they don’t have a detailed plan in place.

Nucleus commented that one of the most interesting findings in the report is that advice itself does not seem to have a material impact on the confidence of those approaching or in retirement, though it is slightly higher for advised customers at 7 compared to a confidence score of 6.8 for those who have never taken advice.

The fintech business, created following James Hay Partnership’s 2021 takeover of Edinburgh-based Nucleus Financial, has outlined 14 recommendations for the retirement industry, including platforms and other providers, advisers, regulators, and government.

The list includes accelerating efforts to bring to fruition the pensions dashboard, enabling users to see all their pension information in one place; offering “clear, concise, and standardised” plan information; and championing financial advice. Separately, people are being encouraged to track down lost or forgotten pension pots from past jobs.

Andrew Tully of Nucleus says: 'If we focus on taking actions that lead people to engaging with the planning process, [then] advice, and implementation of products, if required, will naturally follow.' Picture: contributed.

The Nucleus research also shows that people who have drawn on their pension savings report higher levels of retirement confidence than those who have not, regardless of whether they have taken advice. Those who have received advice and accessed their savings score 7.2, compared to 6.6 for those who haven’t accessed their pension funds, and non-advised respondents who’ve accessed their retirement piggy banks score a confidence rating of 7.3 compared to 5.7 for those with pensions untouched.

The fintech firm, which earlier this year took over Curtis Banks Group, said: “This may be explained by the fact that retirees have experienced the immediate and tangible benefits of their savings, or perhaps feel buoyed by a lump sum. Although the concern here is that consumers’ decision-making may be short term, and to the detriment of quality of life in later years.” Two thirds of respondents report being “confident” they will have enough to retire comfortably, though just 16 per cent are “totally confident”, a sentiment largely attributed to an absence of debt.

The report also uncovered how, when looking at investment risk attitudes, the overall tendency is for people to take a very low level when it comes to investing for retirement, with a mean score of 3.2 out of ten. However, consumers who have had financial advice show the highest mean risk appetite at 3.9, “indicating advised clients perhaps have a better or more informed attitude to risk”.

Those with the highest retirement confidence score – those who have not received financial advice – have the lowest appetite for risk, with a mean score of just 2.6, and Nucleus said the implication “is that people are missing out on potential growth opportunities in their portfolio, through not engaging with advice”. Also among the report’s 14 recommendations is calling on regulators to highlight the benefits of regulated advice, and “the dangers of not seeking it”.

Nucleus chief executive Richard Rowney said: “We firmly believe in the value of planning and advice, which is why we’ve invested in this study. We set out to learn more about how we can help people live fulfilling lives in retirement, and how we and others in the industry might address potential issues getting in the way.”

Andrew Tully, technical services director at Nucleus, added: “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. If we focus on taking actions that lead people to engaging with the planning process, [then] 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: “We’re pleased to see people saying they are more confident than we anticipated, though we need to urge caution here, 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.

“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. Auto-enrolment has been a huge success in getting many more people to save for their retirement. But we can’t stop there – the next challenge is to get more people saving more.”