TPAS have a very simple acronym AGE. It stands for “Assist – Guide- Equip”.
When we meet at AgeWage to discuss how people navigate to the things they want to find, we use AGE as our method.
Assistance comes in the practical help people need to get started. People want practical help in finding their lost pension pots and they want help working out what they’re worth both in terms of how much cash they’ve built up and whether they’ve got value for money.
Guidance is the tricky bit, it is pretty hard for most people to get to the information they want without some help with navigation. People get lost in the difficult language, they get confused by numbers and percentages and ratios, sadly sometimes they get misled.
Equipping people for the future cannot come before the other two letters in the acronym, we need to assist and guide before we can be trusted to offer a route map and the equipment to get where people want to go.
People who’ve worked in sales, will recognise this three stage process as the “broad concept” which asks people where they are now- where they want to be and helps them to the best option(s) for them right now.
Getting a result
If you asked people what they’d consider a result from their retirement saving, they’d probably talk in terms of some state of mind “comfort, secure, peace of mind” or in terms of material things – the kind of things they’re looking forward to doing. I speak as someone who has watched , lot of vox pops, spoken with a lot of ordinary people, even provided financial advice.
People do not see the result in terms of 2/3 of final salary, replacement ratios or drawdown targets. These financial goals are what we impose on people, usually to get them to focus on a job in hand – giving us their money.
For us – getting a result is getting hold of their money, for the people we serve, it’s about having their money back. I don’t think that the financial services industry recognises that the most important part of a pension for most people is what we call the “claim”.
The “claim” is the result.
A-G-E in that order
Because we are keen to take on other people’s money, we spend very little time helping people working out how they’ve done in the past. But this is really important to people.
We want to work out how we got to where we are. We want to know how much state pension we’ve built up, we want to know what private pension pots we have and we want to know whether how we’ve saved in the past has got us the result today.
I don’t know of any financial advisory approach that bothers to help people with this really important information. In ignoring what’s happened in the past – we dismiss not just the savings vehicle but the sacrifices people have made to get the money in the pot.
Assisting people to understand what they’ve saved and how it’s done is an essential part of AGE. But people know that what’s happened in the past – is no guide to the future. The nag you backed at Kempton last week, might run quite a different race at Sandown this -we’ve all got “form”. To someone who follows horses , or dogs or bets on anything, studying form is part of the fun. We try to be smart and though betting is not a saving, we use the same cogitative processes to choose a horse as to make a financial decision.
Guidance is needed; very few people would take a serious financial decision without getting help. Ideally this would be from a trusted adviser who would tell us which horse to pick, which way to invest – whatever. But most of us have to rely on things like newspapers , TV pundits – or our mate who knows that little bit more than we do.
Where TPAS have stood out over the last ten years, is that they have provided the guidance people – stressed by pensions- needed – and held their hand from assisting them in their initial query through the second stage (what the broad concept calls “where do I want to be”).
But there is a problem with AGE – which is in the equipment phase. All too often, people are shown the race card, told how to read it – but not told the horse to pick. We did a study of 3500 TPAS inquiries and found that 982 used the word “advice” while only “83” referred to guidance.
The trouble is that whether it’s TPAS, Pensions Wise or the Single Guidance Body, most people just want to know what to do – whether at the races or with their retirement pot.
We are currently unable to equip people to do the right thing – we simply don’t give ordinary people enough assistance -guidance and we don’t equip them for the future.
Why we have to meet the challenge of AGE
Most people working in the private sector can no longer rely on their employer to assist, guide and equip them in retirement. It really is down to them.
For the 10m new savers that have been sucked into workplace pensions through auto-enrolment – the money they are saving is growing. At some stage it will dawn on each of us that this money is our money. I spent time with some steel work this week who totally get that their pension pot is their money. It has taken the rude revelations of Port Talbot to equip them.
In truth, they represent the tip of a very big iceberg and most of it is submerged from view. There are literally millions of people like these steel men. It is important that these people get proper compensation, but it is even more important that the millions like them don’t get into trouble in the first place.
Which is why we have to meet the challenge of AGE. We have to help people to get the best result they can.
That’s why I’ve started AgeWage. In a few weeks, TPAS will be part of the single guidance bogy. But I want AgeWage to carry on – in the private sector – the work that TPAS has done so well for so long.