Popular pensions

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This article is about how we can understand popularity by looking at populism.  Lasting popularity comes from delivering populism with integrity. Populism for the sake of being popular is fake news.

Popular not populist

Being popular, is hard, to be popular you need to speak to the many, be relevant and make things easy.

Populism – appealing to the people – is a highly divisive topic, so in promoting populist pensions, I recognise I will be skating on thin ice.

Theresa May’s press conference where she turned on her own , did not go well. It takes a genuine outsider to have the integrity to pull off that stunt. Step forward Nigel Farage, step forward BoJo, you need to be a serial disruptor – and a chancer – to stand apart in politics.

Farage and Johnson are populist, they get it. They aren’t that popular with those people who can see beyond their agenda. But there are people who use populism to be popular and work to a common agenda we can all agree with.

I am trying to find a way to make pensions popular and I want to understand what are the populist buttons that need to be pressed to be popular.


Populism in pensions

As I’ve said on this blog many times, 94% of the adults in this country , do not engage with pensions through financial advisors. Many do not engage with their pensions at all, there is a substantial minority who are actively interested in pensions and most of them are 50 +.

Engaging the actively interested is hard and getting to the silent majority of retirement savers is nigh on impossible, unless you do something as brilliantly simple as auto-enrolment.

Auto-enrolment is pension populism in action and to understand why it has worked we can turn to the brilliant Quietroom for their latest video – this one is on workplace pensions.

Quietroom are a populist communications agency. They get to the bottom of things , trying to understand what it is that works and delivering it. Because they understand populism, they are proving very popular.

What they’ve worked out about workplace pensions is that workplace pensions are also very popular and they’ve bottomed out why

  1. You don’t have to do anything to join a workplace pension
  2. Your saving is done for you by your employer
  3. When you move jobs , you start again with a new employer and you still don’t have to do anything.

Workplace pensions do it all for you.

Please note that workplace pensions come in all kinds of shapes and sizes, DB, DC and  shortly CDC. What all workplace pensions have in common is that they do it all for you.

That’s what people want. Workplace pensions – powered by auto-enrolment have been a great populist success because they do it all for you.


How to be popular? Do it all for people!

Workplace pensions under auto-enrolment is not the first great populist breakthrough. The man from the Pru did it all for you too. When he hung up his bicycle clips , the man from Abbey Life/Allied Dunbar took over.

The reason why St James Place is such a success is because like the man from the Pru and the financial advisers who followed them, St James Place wealth managers do it all for you.

This may sound too good to be true and it is. The problems with pensions start when we demand that people do things for themselves – witness the pension freedoms which demand people take complex decisions. The same goes for investment management and for the complex tax planning around the Annual and Lifetime Allowance. Wherever people have to engage with pensions, they get bored and fed up and very often give up.

People give up on finding their pensions

People give up on consolidating their pension pots

People give up on managing their own wage in retirement.

I spoke with an SJP wealth manager yesterday and asked him the secret of his success. His answer was that he took away all the decisions from his clients – he was their fiduciary manager.


Doing it all is expensive

Wealth management is expensive , it requires a lot of money to stay in a luxury hotel and the same can be said for employing a good wealth manager who can manage the tax and make sure your every financial need is taken care of. I don’t begrudge St James Place or any other wealth manager their fees. Nor do their clients, who love them.

The trouble is not with those who can afford wealth management, but with those who can’t.  The reason that 94% of us don’t employ wealth managers and pay for financial advice is that we aren’t wealthy. As well as speaking with the SJP chap, I had a drink in the evening with an IFA who told me that wealth now started at £im.


So how do we do expensive things cheaply?

Firstly we need to do things together. The only way that we can get the kind of help that the wealth managers give their clients to the 94%, is by delivering it in bulk – through employers, insurance companies and master trusts. These mass-distributors are the key to the problem of distribution. The cost of getting to the 7m + NEST members, the 4m  + People’s members – the nearly 3m NOW members and the 1m Smart pensioners can be radically reduced if they do the distribution.

Secondly , we are going to have to be a lot more relevant and focus on the things that take away problems – rather than add to them. So services like finding pensions, consolidating pensions and providing consolidated pension forecasts have to be delivered to people in a way that means those people don’t have to do anything.

That means digitally and (for now anyway) , through hand-held devices.  There is no other way of doing the expensive things cheaply today.

Thirdly, we are going to have to keep focussed on the lessons of the past and not require people to do things they cannot do. I think that most people struggle to spend their pension pots because they get frightened, lost and give up. They either take too much at once or take nothing at all, or just strip out the tax-free cash and wait till something better comes along.

Three things

  1. Do things together
  2. Focus on delivering things in a relevant way
  3. Make things easy and not hard for our customer.

Populism with integrity = true popularity

To deliver a mass market guidance solution , which I am trying to do with AgeWage, we will need to employ the lessons of populism with integrity. That means working damned hard to do things together, to be relevant and to make things easy.

Keeping things so simple as to meet these three criteria is really hard. Some people are doing it

There are plenty of smart pension providers who are doing it. Royal London reported record profits this week by being popular, Pension Bee, Smart Pensions, People’s Pension and many others are doing a great job of running  pensions , focussing on doing things together, being relevant and making things easy. They are delivering cheaply but in a good way. They are making pensions popular.

My intention is to extend their good work into guidance and ultimately into advice. If you believe that I know what I am talking about , I’d like you to invest in my business Agewage – using this link.

 

www.seedrs.com/agewage

 

 

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About henry tapper

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