Looking back over the headlines in the trade press, I read a depressing litany of stories about the industry feeding itself.
Aegon says it has deep pockets (to compensate financial advisers). It’s chief executive calls its life company (the once mighty Scottish Equitable) tired. He urges advisers to abandon insurance and pursue wealth.
An adviser returns from the FCA having “learned lessons” and then dishes his lessons out to his colleagues.
I’m visited by a rather rich start-up that turns out it wants to re-vend through Pension PlayPen , until it finds that a “D2C” strategy, might conflict with its aim to get money off Aegon to feed its advisers.
What has all this got in common? 95% of the conversations I read in the retail trade press are about how IFAs, life companies and platforms are feeding themselves.
Meanwhile 94% of the British population aren’t taking financial advice.
It is extremely difficult for anyone to be genuinely innovative if the entire eco-system is inter-dependent.
Those few organisations that have made a genuine effort to get out of the bubble – principally the big auto-enrolment master trusts, are generally ignored by the advisory community because they do not facilitate adviser charging, do not offer a platform for an adviser’s DFM and aren’t engaging IFAs with a suite of modelling tools, a dashboard and all the other “sales aids” that have been pioneered by platforms.
Most advisers are hopelessly in hock to other parts of the distribution chain (where the money goes) and most asset managers are similarly dependent on IFAs.
But this whole process serves only 6% of the population.
Over four years since the announcement of the world changing pension freedoms
- there is still no way to compare the pensions market – no pension aisle in the money supermarket
- there is still no authoritative portal for employer due diligence on workplace pensions
- there is still no way to understand fund supermarkets – without a professional shopper by your side.
The pensions dashboard is agonised over in the DWP, politicians dance around a pin rather than press the “go” button, the ABI rail at Government inaction (forgetting that the ball has been in their court these 20 years).
Time for change
I’ve said it before – many times on this blog – but we need to move from the bubble to the outside world and quickly.
People need timely easy to understand numbers that allow them to compare one pension with another, as easily as a “holiday” “car” or “washing machine”. If that sounds like commoditising pensions, then so be it. Pensions has no right to be considered anything more than a product.
The vanity of the pensions industry in assuming its bubble can simply be expanded to include the 94% who don’t is breath taking. The silly efforts of trade bodies to organise kite marks like PQM are doomed to failure, because they have no external validation.
10m of us bought a meerkat last year, MoneySupermarket has 25m of us on its database, Go Compare is getting there too.
Sage provides pension support to over half the employers offering workplace pensions.
Most people and most employers do not do there shopping at the local IFA! So why is everyone so obsessed by them? Why does the whole retail pensions industry suck up to them?
Only 6% of the UK population uses an IFA.
Time to act
I am resolutely opposed to a continuation of the status quo that has prevailed since I joined financial services in the early eighties.
Pensions (both retail and institutional) has allowed to gather itself its own mystique, which makes it invulnerable to change.
Consequently there is still an asymmetry of information between the few who have access to proper advice, guidance and data – and the many who don’t.
This is not the case with most other forms of retail products. If I want to buy toothpaste, I can make an informed decision by looking at the price per 100ml . If I want to buy a new phone, I can test the market a hundred different ways.
It is only in pensions, that there is an almost complete absence of comparison. I have an email from the IGC chair of one of the big insurers which says
“I will only meet with you if you give me an assurance you will give up your aim of publicly benchmarking workplace pensions”
That organisation relies entirely on advisers for distribution, only 6% of us regularly use advisers. This is why we have the bubble that we do