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Phil Wickenden: Who are we innovating for?

It is not advisers and their clients crying out for new retirement products.


Innovation has arguably been a bigger requirement in the retirement market for providers than for advisers and their clients. At least that is how most advisers feel and most likely what providers secretly know, what with drawdown sales at their highest level, annuity sales continuing to fall and notable client requests for products that offer them a guaranteed income and future flexibility.

Faced, post-pension reform, with such a massive and immediate threat to pensionable (and non-pensionable) assets that would have previously been a shoe-in for some sort of tried and tested standalone solution, providers are emerging with shiny new buckets they hope will catch at least some of the leaked annuity business.

So the actuaries have fastened their capes and have assumed the unlikely role of saviour in the face of extinction.

But innovation, seemingly, is not what most advisers are crying out for.

Here’s why: within the last 20 years, defined benefit schemes have declined significantly, with only 13 per cent of final salary schemes open to new joiners and very few FTSE 100 companies offering schemes to new members.

Mixed with increased life expectancy and lower gilt yields, a new generation of savers has had to adapt to an uncertain retirement.

That was already happening. A growing number of advisers increasingly swear by a blended/multiple solution retirement strategy, with many conceding reliance on single standalone solutions was already a thing of the past for most (core) clients. Especially for those using platforms, the construction of a retirement fund from different product wrappers was and is already a reality. The change advisers recognise is in the approach, not so much in the product architecture.

But that does not mean new-fangled solutions will not be a hit. Steve Jobs cautioned against designing product strategy by focus group when he said: “A lot of times, people don’t know what they want until you show it to them.”

This was a twist on Henry Ford’s: “If I had asked people what they wanted, they would have said faster horses.”

Just because advisers and clients are not clamouring for “break the mould” new does not mean new solutions will not hit the spot. Apple’s competitive edge is the fact it has been able to avoid the “sameness trap”. When you rely solely on customer input, it is inevitable they will tell you to do what other companies are doing – but that is the last thing the industry needs.

Phil Wickenden is managing director of So Here’s The Plan


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