When it comes to taking a decision on your company’s workplace pension, you’ll probably be told a lot about what is good and what is bad but unless you allow those ideas to germinate and gestate till you own them, the decision will not be yours and you will not own the “solution” you present to your staff.
I’m trying to find the killer questions that I’d like to be asking providers if I was chosing a pension for my staff. My difficulty is that my head is cluttered up with thirty years of “stuff” and I have difficulty working out what I am asking as an expect from what I am asking on behalf of a novice.
Here is a table I prepared earlier
|Minima needed for you to make offer||Members (no’s)/conts (£pa)/Asset transfers (£)|
|Describe your Default option||STRUCTURE (egTDF/Lifestyle);ATTITUDE to SMOOTHING;DIFFERENTIATION|
|Non-default fund organisation||Minimalist/core funds/freestyle|
|Member support services||Within the price/outside the price/not offered|
|Bells and whistles (corporate wrap SIPP etc)||Core to offering||Optional||Not offered|
|Auto-enrolment support||Tools within charge, tools charged in addition, minimal support tools|
|Member communications||Fit for purpose/ striving for excellence/ Work with employer (bespoke)|
|Attitude to price||Ultra competitive/ value for money / reassuringly expensive|
|Offer at retirement||Proprietary brokerage/In house annuity/partner with external broker|
You can see the problem. Experts among you will probably relate to what I am trying to get at and I hope that the conversations I have with providers will allow me to assess where their heads are at but how do I translate the answers into meaningful information for employers who will take decisions for themselves (without talking with me)?
What I am trying to get to is a frank conversation about what a provider is after. Typically these questions cannot be answered with pure data but with some form of subjective engagement with the question.
My simple analysis divides each question into three answers; this simplifies the answering and my analysis of the responses.
Take the question on “price”. I like the word price as it focuses minds on a consumer decision in a way that “charges ” doesn’t. I would expect most providers to opt for “Value for Money” as non-committal. But some providers will have two offers to market, one that is reassuringly expensive and appeals to the purchasers of a fully bundled all in service while the other offering is “pure vanilla” and offers a minimum deduction for a minimal service.
So where I am aiming to get to is an analysis that characterises provider offerings , not by quantitive metrics (number of funds offered, years trading in the UK etc) but by what the provider is “trying to do” , who it is trying to “do it for” and “what distinguishes one offering from another”.
I am finding that some providers are trying to appeal to more than one group. They may have a sophisticated contract that and a basic contract. Where there are distinct proposals, it makes sense to deal with them as separate propositions (albeit analysed under one umbrella).
There is a final part in this and it’s one that always comes up in conversations with clients, usually at the point where validation is required. The question is of course “so what would you do” and the correct answer is to “follow your gut instinct”. This is not because the adviser wimps out, it’s because any decision worth taking has to be owned by the person taking it.
That said, I think that a system of analysis must go beyond a simple presentation of facts and include a rating of the quality of the offering. Whether this by traffic lights, a star system or some numeric formula (like a percentage), the rating needs to be simple.
But to return to the beginning, if the rating is telling the client what to do, the process has failed. If customers march to the check-out gate armed only with a subjective view from an advisor, they will take no responsibility for the decision nor have much inclination to manage the workplace scheme when it’s up and running.
The internet allows us to share information in a way that we had never before countenanced. People can take decisions in a structured guided way which we could never have envisaged thirty years ago. But the principles that underly the process of buying (or indeed selling) remain unchanged. We need to help people to take decisions, we don’t need to take those decisions for them.
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- The sins of the past (henrytapper.com)
- The pension zeitgeist (henrytapper.com)
- Better-buying makes auto-enrolment work (henrytapper.com)
- “Three into two won’t go”- NO EXIT at Playpen lunch! (henrytapper.com)
- So what’s a good DC pension – Mr Webb? (henrytapper.com)