Next in our series on Pensions Dashboard, Ian Macintyre, Strategic Insight Manager at Royal London, looks at the impact on the market for advice.
Nobody really doubts that Pensions Dashboard will be good for most consumers. What’s less talked about is the impact on the market for financial advice. It’s clear that there will be changes. And change can mean opportunity or risk depending on how you view it.
What’s going to change?
More engaged customers
The key change is that customers will be able to see all their pensions in one place leading to more engagement. But this is really only a stepping stone to the end goal of people making better choices and enjoying a better retirement.
Having discovered they have various pensions ranging from a DB, state and several GPPs and being able to see their potential value, most people will have questions. Possibly quite a few:
- Is that enough? Do I need to pay more in?
- Can I retire early? Or do I need to work longer?
- What’s a final salary scheme? Can I convert that to money? Should I?
- Do I really need all these different pensions? Can I merge some of them?
- This one has a guarantee, what does that mean?
And these are exactly the sorts of questions that we need more people in the UK to ask if we’re going to fill the retirement savings gap and help more people get better outcomes. The problem is that most people in the UK don’t know the answer.
So they need advice. Or at the very least, guidance.
Information available everywhere
Today if an individual wants to know about their pension they get the information from one of three places: their pensions provider, employer, or if they have one, an adviser. But that will change fundamentally once Pensions Dashboards become open. People will be able to get a valuation from their banking website, or an app from a small fintech or robo-adviser. Or maybe even from their favourite newspaper websites.
And of course a Royal London pension will be visible on any of our competitors’ Pension Dashboard, and vice versa.
This means more organisations will be jostling to engage consumers about pensions. And many won’t hesitate to engage your clients.
But of course one other group can also host a Dashboard – advisers.
Making advice easier
How often does a new client arrive knowing exactly where all their pensions are and what they‘re worth? And how many arrive with a shoebox of statements and a vague idea they had a pension at a company they worked for 20 years ago, that went bust 10 years ago?
Dashboard means that very quickly the customer can give you the information you need to get on with doing what you do best – give advice. Dashboard data will provide a lot of the key data for your fact find. We’re big advocates of allowing advisers to access Dashboard data on behalf of clients. This is consistent with our view that impartial advice needs to be available to more consumers.
How to take the opportunity
If your customers are going to be looking at a Pensions Dashboard, then you want it to be your Dashboard. If you‘re not a firm that has the IT skills in house don’t worry, we fully expect that a number of organisations will offer services to advisers to host a Pensions Dashboard, especially the larger back office providers.
Once you have a Dashboard you’ll want to make sure that it provides something that other organisations Dashboards don’t. This is where knowledge of the client and their underlying needs will be vital and again is a great place for an adviser to be. For what does a bank know about your client’s attitude to risk or retirement goals?
The last challenge may be the hardest, but potentially holds the biggest opportunity. There will be more people who want advice, but engage with financial services companies digitally. With Dashboard more of them will start their pension engagement digitally too. Advisers that can embed Dashboard into the services they offer clients, and use it to provide them with a streamlined service will be able to serve more clients in a profitable way.