Words can get over-used, colonised and emasculated. Transparency may be coming such a word. I think a better word, that ordinary people get – is “honesty”.
I am not a fan of the phrase “to be honest” which usually precedes a lie. However I cannot think of a better corporate motto – “Agewage- to be honest”, that sounds right.
I am getting feedback that AgeWage scores are a little too honest for some, that they tell a tale that many do not want to be told. There are as many winners as losers in a properly benchmarked rating system but all the attention we are receiving is around the half of people’s pots we’ve analysed that don’t show average value for money.
“Mankind cannot stand much reality” wrote TS Eliot and many of those who run and govern our great retirement savings schemes seem to have taken this thought to heart.
But being honest with people about how their savings are doing need not lead to a savings meltdown. It might ask someone to ask why their savings are under-preforming and this might prompt them to start reading the IGC and Trustee Chair reports that we write for them.
People might, were they told the honest truth that their pension savings weren’t doing as well as the average start asking questions about how their money is invested, how much that investment is costing them and whether there are better options for them.
They may conclude, as most seem to, that the best way forward is to ask more questions , about other of their pension pots, about retirement options and most pertinently
The need to be honest
I am not sure that those of us engaged in long-term saving understand honesty as ordinary people do.
For example we devise strategies designed to dampen down volatility in savings values at the risk of reducing long-term growth because we fear that people will stop saving if they see the value of their savings fall.
Ironically, very few of us see the value of our savings as there are very few apps that link to our savings records. Consequently the only people who see what is going on with their savings tend to be those who have the financial capability to understand investments can fall as well as rise in value.
If we had conviction in what we were doing we would not just allow people to see the value they were getting for their money but promote value for money scores – whether good or bad. I suspect that at a theoretical level – that conviction exists.
However, when these strategies are shared with ordinary savers, the worry is that they may stop saving , switch to unsuitable investment strategies or complain.
If we want people to engage with their savings, as everyone says we do, we cannot dictate the terms of that engagement, we need to be honest with people and that means telling them not just the “good” but the “bad”.
Honest with ourselves
One of the things that’s surprised us over the past three months , is the number of unexplained “outliers” that we’ve picked up in the analysis of hundreds of thousands of pots. Some of these outliers are explainable – one chap asked for a score and told us he had invested in cash for the past 15 years – but many are inexplicable.
We suspect that not all the data we get is complete or accurate. This will come as no surprise to those for whom “data cleansing” is a full time occupation. There are more than enough errors to keep them in business.
But it would certainly come as a surprise to those who read trustee chair statements and IGC reports as I have never seen in any of these statements , a comment such as “we are sceptical that all data we hold is accurate”. That would set hares running in our trade and national press, involve regulators and – potentially – lead to a lot of trouble.
More trouble than it’s worth?
To date, the argument for not airing issues such as under-performance of managers, high charges and poor data has been based on the principle that we “let sleeping dogs lie”. But that principle doesn’t work well when the dogs are supposed to be engaged.
The pensions industry cannot simultaneously expect dogs to sleep and to take the kind of tough decisions we are expecting of them.