The most interesting discussions at yesterday’s pow-wow at the FCA centred on “Measures of Success”.
Bearing in mind the point of the Guidance Guarantee is help people make an informed choice, I’d have thought the answer was simple
The measure of success is based on whether people think they can make informed choices after getting the Guaranteed Guidance.
However there were more subtle forces at work and they all centred on people taking the “right decisions”. And as soon as you start down that track, you start seeing the conflicts of interests that so beset financial services.
Unsurprisingly, the financial advisers thought that the measure of success was that people sort (and presumably paid for) financial advice.
Those working for companies whose business was selling annuities, wanted people to buy annuities.
And almost everyone thought that people just taking their money and running was a bad outcome (though I thought I saw a smirk on the lady from the Treasury’s face as the pound signs lit up).
The lady who I was sitting next to made a sensible comment to me- she suggested that if people left the room feeling that the meeting led to a better outcome for them, then the meeting had been worthwhile. In an age where feedback via social media is only a click away, it’s hard to see beyond the simple “like/dislike” button as the measure of success.
So we need to work backwards from the questions “what do people want?” and “what do people need?”. Most people seemed to be of the opinion that the two were not the same but I suspect that we in financial services have been so used to giving people what they don’t want dressed up as what they need that the thought of giving people what they want is a bit radical.
Rather than trying to second guess the public, the FCA would be better off asking people what they want from these sessions and what they want in retirement. Another sensible thing to do would be talk to the University of Bristol who have a dataset of 20,000 people’s financial decision making through retirement including some pretty powerful data about what people actually do (given half a chance).
The statistics do not lie (well not when they run to tens of thousands of case studies). One thing we know is that there are hardcore money saving experts who do their own thing, there are people who rely on others (financial advisers) and take informed decisions and there’s a great bunch of us who just want to do what everyone else is doing so long as it “does the job”.
I came in for a bit of stick from the financial advisers in my group for suggesting that it wasn’t a financial sin not to be too interested in all the choices and just want a “default”.
My own view is that provided a default is “good enough” then an uninformed choice is better than a bad choice. For the disinterested, the Guidance Guarantee is really important and as my friend Michelle Cracknell put it to me this morning
It would be good if more of the £20m development budget is spent on how we reach the disengaged ….
- I would like to see a Qualifying Workplace Pension is required to offer a default decollation option in precisely the way they offer a default accumulation option.
- I would like to see the Guidance Guarantee really valued by Britain’s retiring public.
- And I’d like to see people allowed to take or not take a choice free from judgement, regulation or unwanted paternalism.
That way we’ll restore people’s confidence in pensions and have a bit of fun while we’re about it – very Pension PlayPen
I haven’t named names as we were under the accursed Chatham House rules, )Michelle’s correspondence came later(. The whole deal’s being run by Maggie Craig who I hadn’t met before (but seemed really nice).
We couldn’t do the whole tweet thing but I hope that as these meetings continue, the discussion will be more “Open Government”. In the meantime I’d like people who read this to be reassured, this was a very promising meeting.