A new retirement planning service aimed at filling the so-called advice gap “will only serve to confuse thousands of investors”, an IFP board member claims.
The Hargreaves Lansdown Retirement Planning Service, which will operate under a flat fee system, was launched last week.

The firm said it was set up to “respond to a huge increase in appetite for pension freedom information”.

The company has made the move after its researchers estimated there would be demand from 120,000 investors a year for low-cost advice.

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IFP board member Chris Williams CFP^CM, chief executive of Wealth Horizon, was critical, however, after the service was announced.

He said: “It is now widely accepted that there are a number of consumers who can no longer afford traditional financial advice yet opening up watered-down ‘advice’ via platforms is not the solution, it is only adding to the confusion around what does and does not constitute advice.

“A recent paper from the FCA identified that information overload is something that needs addressing. Now is the time that consumers need clear and robust advice, overloading clients with information for them to action themselves will only serve to confuse thousands of investors.

“Simply providing information, no matter how good, is not a substitute for actual advice and can cause more harm than good to investors who increasingly don’t know where to turn."

The cost for using the service is a flat fee of £395 plus VAT. Should an investor wish to move onto a traditional advisory service, this fee will be deducted from this cost.

Hargreaves Lansdown said its advisers charge fees of up to 2% of the value of the amount advised on for retirement planning advice.

Responding to Mr Williams’ remarks, Danny Cox, HL head of communications and chartered Financial Planner, said: “There is a huge appetite from investors for information, guidance, tools and advice on the pension freedoms.”

He said: “The advisory market has been crying out for innovation for years and the HL Retirement Planning Service is we believe, the first of its kind and will provide an alternative solution to those clients who want more than Pension Wise can offer but not a traditional advisory service.

“Not everyone wants advice or wants to pay for it. The HL Retirement Planning Service will be one of the solutions investors can use to help them to make their retirement income decisions and will help clients decide whether or not they need an advisory service.”