People aren’t stupid- our products are!

Apropos nothing at all

Apropos nothing at all

I’m taking this comment out of comment so I won’t mention it’s source- it appears on a pensions website and is made by a leading actuary.

Our challenge is to find a way to redress the balance and help them make the right decision for them – whether that is to “spend spend spend” or to buy an annuity

It’s only one of a number of comments suggesting that the alternative to annuities is the Lamborghini. This is known as a false dichotomy!

Kevin Wesbroom has suggested three types of retirement spenders, the advised, semi-advised and the state funded. This is a maintenance of a status quo where the advised have people to manage their wealth, their tax affairs and their legal matters, the semi-advised rely on the trustees of occupational pension schemes while the rest of us rely on the social.

We cannot expect a budget to change this framework of financial organisation but we can expect those who create the rules to give a freedom of choice to people to get to where they want to be.

Most people do not want to be in an annuity (L&G estimate that annuity sales will fall 75% next year), most people do not want to be penniless and reliant on the social, most people want to be in control of their own finances- to have the freedom to choose.

The choices offered in the quote are not exclusive.

But more worrying than the weak reasoning is the attitude that lies behind so many of these comments. Having conspicuously failed to make pensions relevant to Jo Public, certain pension experts are now dissing the new rules for allowing people to DIY their pension spending.

I do not see Martin Lewis ever adopting such a patronising attitude, or Paul Lewis or Ros Altmann or any of the people who everyday folk actually listen to.

For years we’ve had the same thing from the retail advice sector. “It doesn’t matter where you save as long as you save”, was something I was taught at financial advisor school; this was just as well as some of the saving plans I sold in the 1980s were so poor they are under investigation from the FCA 3o years later!

People who walked away from my advice then weren’t saying I want to spend spend spend, they were looking to save save save but not into my product!

No matter how persuasive the financial services industry thinks it is, there is wisdom in the crowd and they will reject products that they don’t understand and therefore don’t value.

Long-term care products introduced in the 1990s never sold because no-one understood them, they could have been competitively priced but since the only benchmark was an actuary’s profit assessment, how were we to know. Once the trust has gone out of the market, there is no way that we’ll take the market’s word for it.

This is why I take as our objective “Restoring Public Confidence in Pensions”. Everything we do as pension people must be focussed on improving the spending capacity of those in retirement and that means making sure the money is in the right amounts , in the right place at the right time.

The real process of education avoids polarities such as “buy an annuity” and “spend, spend,spend” and starts by listening carefully and researching properly  the spending plans of those in retirement.

“People like you” planning is probably the best we can do by way of guidance (you know the kind of nudge you get on Amazon). Nobody knows quite how they will spend their money in later life, but as we progress through this new maze of choice, we will start to see the patterns emerging which will allow us to build the right delivery mechanisms, the right investment strategies and the right advisory techniques to help people avoid these false dichotomies and make the right choices.


This article first appeared in

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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