Last week, developers from 21 diverse firms, ranging from long-standing financial technology companies to start-ups, convened at Aviva’s digital garage.
As part of a Treasury-led “tech sprint”, they designed prototype consumer-facing services built on the pension finder technology already established as part of the pension dashboard project.
This may seem a relatively small step but it has enormous long-term ramifications for the whole advice community. The successful delivery at the end of last month of not one, but two, fully working prototype pension finder engines just 12 weeks after development began is a major achievement.
Any organisation that can demonstrate it has good enough credentials to run a pension dashboard will be able to do so, and there being more than one will be good for competition.
Pension dashboards will make it just as easy for consumers to access information on their pensions as it is for them to access data via online banking – but with all the arrangements visible in one place. It will provide a major advance to the customer experience pension providers currently deliver.
Considerable credit is due to all that have participated: the Association of British Insurers and the development partners Aquila Heywood, Experian, ITM, Origo, Runpath and Safran but, most importantly, the Treasury.
Government support has played a key role in getting organisations to embrace this project. Yes, without their involvement, services of this type would have evolved naturally, but they would almost certainly be resisted by the institutions that impose the highest charges and are most reluctant to share the information consumers need for fear they will go and find a better deal.
Treasury economic secretary Simon Kirby stated last September that the Government expects all long-term savings providers to support this initiative. While preferring to work with organisations willingly, it has been made clear there are levers to introduce compulsion if necessary.
I should include a few words of caution here. The prototype is exactly that: it proves the technology.
Some people seem to have formed a view that dashboards will provide a wide range of additional information, such as fund performance and asset breakdowns.
Others have chosen to criticise the omission of pensions in payment and other savings vehicles not included in the initial specification. Generally, such comments seem to come from people who are not close to the project.
As a member of the Treasury steering group for the project, my view is that the range of value-added data and solutions included will be one of the ways in which different dashboards can set themselves apart.
Equally, I believe it is inevitable the project will extend to cover both in-retirement provision and other savings vehicles. But dealing with the world of legacy pensions, including state and defined benefit schemes, represents the harder challenge and it is right that these other issues are addressed first.
Having proved the ability to “find” pensions, the project now needs to embrace a far wider range of constituents. While the finder technology has been built on a standalone basis, there are many similar initiatives to deliver this type of information.
We need to find a way for the finder technology to form part of how other services support consumers, rather than build new infrastructure to operate in splendid isolation.
Pension dashboards will be a key catalyst to a new era in financial advice, where services become far more affordable and accessible. The wealthy may still choose to use face-to-face advisers, but even their costs will be reduced by having easy access to such up-to-date, accurate and comprehensive data. More importantly, it will be commercially viable to deliver services to millions of people for whom they are currently unaffordable.
The successful delivery of the pension finder prototypes makes it more important than ever for advice firms, providers or platforms to identify their strategy for delivering a dashboard to clients. If not, they are going to miss out on one of the biggest changes to advice since the introduction of regulation in 1987.
Ian McKenna is director of the Finance & Technology Research Centre