How far can guidance go?

guidance 2

Guidance Technology?

I am interested by Guidance Technology, it is at the core of

As we use it, Guidance Technology narrows down options available to people to a shortlist that is clearly differentiated.

For an employer to choose the right workplace pension, we list up to 25 options in a clear league table, each provider’s league position depending on an employer’s circumstances and preferences.

Employers make choices, not because they are told what is best, but because it becomes clear to them what is the best course of action for them at that time.

Guidance Technology applied to individual decision making at retirement

Let’s suppose it applied to the decisions to be taken by someone at retirement, the options to someone might appear ; this of course is a case study and not meant as advice to anybody I know!

  • Cash out the pension pot and pay off personal debt, keep working
  • Economise, keep the debt and keep working
  • Economise,keep the debt, keep working and keep saving
  • Cash out, emigrate and ride your luck.

Where digital guidance might help would be in helping work out what the different options would mean in terms of cashflow (income) and capital (cash in the bank).

It might also help work out which route involved paying least tax (particularly helpful with the timing of decisions).

Guidance Technology might also help in suggesting what might happen to investment income, what state benefits might look like in years to come, it might even help in working out what to put by for later life expenses or whether to insure against the calamity of long term care expenses.

Does it work – do we have evidence elsewhere?

I am struck, when I talk with accountants, how most of their scenario planning is done on PCs, tablets and even i-phones. Go to an Accountancy Conference and every stand is advertising an app to deliver instant answers to financial questions.

These apps pre-suppose the ready availability of good data (it is the stock in trade of an accountant) and the ability of an accountant to follow instructions to get to the final screen.

Many of these apps are marketed as games, with rewards along by way of icons and bells to signify milestones achieved. Many apps have help buttons which introduce answers given by previous users to frequently asked questions. The concepts of gamification and of social media are integrated into the journey.

I have seen demonstrations of the use of similar solutions to help people take individual decisions. They come from abroad. I was recently talking to an Italian pension administrator who provides these apps to 3.5m European customers.

Guidance Technology need not be difficult, it can be fun and the journey can and should be rewarding.


Making it fun

To return to my retiree,Technical Guidance could do more than list the options, it could order the options according to the importance that individual placed on “not paying tax”, “trusting investments”, “capacity to work”, “willingness to work” and “current and likely future health”.

In my example, there are a mixture of  quantitative and behavioural variables that need to be input into the model for a league table of options to emerge and it’s vital that any model can be revisited to see the impact of changing them in absolute and relative terms.

The other feature I see in much of the software appearing in accountancy packages, is a degree of humour and homeliness. Instead of spreadsheets, these applications present the variables in terms which resonate with comfortable scenarios, one accountancy package “Quickbooks” even sound like “Cookbooks”, making me smile and titter!

The front ends of these packages are visually attractive and navigation is thought through to make next steps intuitive and therefore easy. Gamification is the concept of making something that looks hard , seem easy. Pension PlayPen gamifies its subject.


What’s stopping us?

It strikes me that financial advisers are not going to want to embrace technical guidance anytime soon. It looks about as attractive to 21st century advisers as the threshing machine looked to 19th century farm labourers.

But this is the point. The demands to feed the empire made on 19th century farmers, demanded the application of new technology to increase overall productivity. The increase of productivity per labourer ultimately fed through to greater prosperity for the farm and fed urbanisation which moved us to where we are today. There are many who pine for a rural idyll of a pre-agrarian revolution, they should be reminded of Hobbes’ epithet for such a life “nasty brutish and short”.

The demands on our welfare state demand that we can no longer hand out benefits, no more can we hand out advice. People need to adapt and adopt the new technologies if they are to make the most of the new freedoms that are coming their way.


Leadership is needed to bring about change.

For most people, the kind of advice that people with wealth can purchase, is beyond their means or simply not something they want to pay for. Whether it is our of necessity or parsimony, people are not going to pay for a financial plan or pay the commission to implement it.

For these people, Guidance Technology is probably the answer. With 65% of the population now owning a smartphone or tablet, the hardware is in place. For everyday people, the software is not. The barriers to getting that guidance software to the mass market are primarily regulatory. But regulators are being held back from allowing guidance technology to be put in place, beset by the legacy of mis-selling over the past 30 years.

What is needed is leadership that can bring together the technology , the products and the advice and make it readily available to everyone. So people can be empowered to make financial decisions for themselves.

I am beginning to see signs within Government of such leadership and will be writing more on this subject in the next few weeks.




About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in advice gap, consultant, defined ambition, defined aspiration, pension playpen and tagged , , , , , , , , . Bookmark the permalink.

5 Responses to How far can guidance go?

  1. Duncan Singer says:

    Spot on Henry! Now we have a clearer picture of the future shape of workplace savings, the vision required to design the solutions will undoubtedly start to turn into reality. The pace of delivery is still a huge challenge given the size of the agenda and financial commitment required, and the challenge of a workable pricing model to the customer. I suspect part of the solution will involve harnessing the power of digital marketing in the workplace, which could accelerate the pace of delivery massively.

  2. I’ll agree that technology is going to be the only way that the scale of the need can be met. I’ll also agree that ease of use is important – I’ve spent over 30 years producing advice and assessment systems for users from experts to clients. In that time it’s become clear that the kind of system that works for an expert is not the same as one that works for a client.

    Someone who will use a system only once and understands little about the subject area will need to be led gently, and with much help, through the process. They should be given little interim snippets of information during the process to keep them interested and they should have a lot of information and signposting at the end to guide them forward. An expert wants something quick that lets them try out lots of ‘what ifs’ and that lets them skip what they know to be irrelevant. The pretty, gaming type features become really annoying with the fifth case in the third day of the tenth year of using the system.

    Youw’re also right about the quality of data being vital. I suspect that there lies one difference between financial advisers and accountants. I’ll put it down to dealing with large amounts, long periods and unclear futures but many financial advisers are really bad with figures – they round things. We have a team that does Fintal cases – equity release tax / benefits impact assessments – and it’s common for them to have to ring advisers to check figures and to find out that £1000 and £500 and £20 are actually £1076, £487 and £22. The broad figures are probably fine for future planning in 20 years but in benefits and tax 1p can make a difference and sometimes a huge difference.

    I suspect that we’ll find that’s going to be true around guidance as well; the options will be fine with broad data but the effects will prove that the devil’s in the detail.

  3. henry tapper says:

    This excellent piece appeared in Pensions Expert this morning.. thanks Karen!

    The effectiveness of online portals and tools as communication devices is largely dependent on the way they are used – the mere act of putting a tool online is not, I would argue, communication.

    Our experience in the online space has changed significantly over recent years. My son asked me recently how long we have had a computer and the internet at home. I recalled spending almost £1,000 some 20 years ago on a home PC that had only 1/150th of the storage capacity of my current mobile phone – and that’s before we even start to compare my phone’s 4G browsing experience with the dial-up service we had in 1994.

    Technology is now an accepted part of the way we gather information to inform our decisions. Self-service opportunities are all around us and are used widely, which has far-reaching implications for the way we connect with people.

    We need to challenge our old ways of thinking about technology and how we use it if we want it to help us communicate effectively.

    Encouraging employees to use self-serve technologies is not just about empowerment, it’s about time-saving in our resource-stretched pensions departments
    If we take a Field of Dreams approach to online communication – in other words a belief in the philosophy of ‘build it and they will come’ – then we may quickly conclude that online portals and tools are overrated as communication devices.

    What is needed is a digital communication strategy; the emphasis in this phrase is on the ‘s’ word – the launch of a portal or tool needs to be part of a planned strategy with defined outcomes and measurable targets.

    A good example of self-service technology working well to keep employees informed about their pay and benefits is Asda’s fully interactive online reward portal.

    This enables the grocer’s salaried colleagues to view their pay, pension, bonus, shares and other financial benefits online.

    In developing portals such as this, there is always the consideration that staff would need a reason to visit it on a regular basis, rather than logging in once when it’s all new and then not using the facility again. This is a strong way of showcasing a return on investment to the company.

    One way of achieving this, and the way that Asda has used, is to integrate staff payslips with the system, therefore giving a reason for people to visit the site on at least a monthly basis.

    Creating a direct link with benefits and pay also reinforces the message for staff to review their financial choices as a whole and consider ways to make their salary work better.

    The big red button

    Once you have an employee’s attention and they are engaging with the online tool, allowing them to go further and take any action they need without fuss can be empowering – essentially a ‘big red button’ moment, making the next step as obvious and easy as a big red button on the web page.

    The implications are not just for the benefit of employees, as employers can also reap the rewards of using more technology.

    The more employees can do themselves online, the less likely they are to trouble their HR or pensions departments – thereby reducing admin requirements around staff queries and providing extra information.

    Encouraging employees to use self-serve technologies is not just about empowerment, it’s about time-saving in our resource-stretched pensions departments.

    Another important aspect of online delivery is the ability to measure and report on behaviour.

    Hosting analytics can provide extensive reporting on how, for example, users accessed the site – through mobile or PC – how long they spent online and their navigation while on the site.

    This gives a basis, not only to report success, but to make changes to the user journey when appropriate.

    Karen Partridge is head of client services, UK and Australia, at communications consultancy AHC

  4. says:

    Great article. I think however, that the impact of regulation on stifling all forms of communication which could actually help “self-service” should not be underestimated. Our regulation is still based on the premise that customers are forced to swim in a sea of sharks when dipping their toes into advice waters. Financial services as an industry seems to have so many chains and shackles placed on innovation. The FCA say this is not the case and set up an innovation project, but it is they and their approach which stops things developing at the pace they otherwise would. And no matter how much technology is put in front of people, there is still a great need for MOST people to understand what retirement really means in terms of how it is financed. Technology simply provides a guide to take people down different roads. What it cannot do for many years if ever is educate clients into knowing what road to travel down. This is where financial advice helps. If financial advisers were able to give advice without fear of being sued to high heaven then you would not see so much of their time devoted to producing back covering suitability reports. If the regulators understood that giving customers reams of paper with meaningless illustrations does nothing but confuse them then advisers could talk to clients and present solutions in a way which would reduce the cost to those customers. Advice could then become affordable. Regulate products more and advice less. Police advice and advisers rather than regulate them. It is our regulatory system that is living in the 1980s, and until there is a sea change in their approach then technological advances will not be able to benefit customers as much as they should.

  5. Andy Heath says:

    Henry – agreed with pretty well all of this (and with Brian’s comments above). Our current Chancellor should give you his backing, otherwise there’s little chance of his trumpeted pension freedoms actually being put into affect.
    Anyone reading this will know the limitations of basing your future income on your own predictions of your life expectancy (or, in most cases, pretty well anyone’s predictions!). How to get this across so that most people will understand, in sufficient brevity that they won’t simply click away from your site, and then help them make a reasoned, risk-aware, decision, is a real challenge, but well worth the effort of trying.
    If you don’t make them aware, could you sleep at nights?
    I predict that the main opponents to this sort of approach (apart from our beloved regulator) might well be those advisers who won’t – or can’t see how to afford – to give advice on small pots.
    All IMHO, of course…
    Happy New Year to all your readers.

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