I have never used a fax machine. Nor, I suspect, have the vast majority of people who, like me, are under the age of 35. Some of my peers report only ever having used them “for fun”.
However, in the bizarre world of pensions, this is exactly how the company that manages your money could ask your financial adviser to get in touch with it.
Understandably, advisers who are now armed with platforms they can access valuations from through their phones, and back-office systems that allow them to track workflows from around the world, can rarely understand why such Luddite practice persists. Yet, persist it does among the increasingly rare but no less influential group we call closed-book providers.
The reason advisers can get frustrated is because their clients can too. What kind of financial planner are you if you can’t even tell me what my pension is worth, let alone what I should do with it?
However, as our cover story this week examines, all hope is not lost for those planners and their clients. Quite the reverse in fact.
Let’s take legacy books’ paper-heavy, backward-facing technology for a start. Of course, companies like Phoenix couldn’t be trusted to get their current IT upgrades right first time round. But at least they are throwing millions at it. The pensions dashboard, if we ever see it, will take valuation delays out of the equation, and force further systems upgrades on providers.
Phoenix, incidentally, is also innovating by allowing savers with small pots to cash out, reducing the breadth of other policyholders higher value clients – and therefore those most likely to be advised – should have to compete with for service.
Moreover, with the acquisition of Axa Wealth’s pensions and protection business last year, it became part of a trend towards consolidation that, theoretically at least, should generate much-needed economies of scale in a part of the market that can only get smaller, extending the useful part of its life.
Undoubtedly clients will find clunky service irritating, but we should not rush to judgment to say that the closed-book industry has caused widespread consumer detriment.
Of the six firms the FCA began reviewing in March 2016, as of June, the regulator has found insufficient evidence for taking any enforcement action against two of them: Scottish Widows and Police Mutual.
While it has yet to rule on the rest, I think most in the market would not predict significant sanctions, and that, while they weren’t perfect, most of the old products people were in did, at least for a period, offer passable value.
With more guidance from the regulator coming out of that, and other reviews concerning non-workplace pensions in the works, the closed-book world has every incentive to offer advisers a brighter future.
Justin Cash is editor of Money Marketing. Follow him on Twitter @Justin_Cash_1