I wonder how many of the 60,000 people who each month decide they want to “get at” their pension money, are finding their way to MaPS website set up for people to understand and compare their investment pathway options (for pension drawdown).
Not many I’ll be bound; those who do are likely to be the 10% with inquiring minds who took their Pension Wise consultation. Speaking to a couple of the pathway providers who I spoke to last week, traffic from the comparator site is minimal. This may be just as well as the site is a disgrace.
I have complained in previous blogs about the lack of relevant factual information on the site with which to make meaningful comparison but – having now had a month or two to dig deeper, I will restate my objections to the site.
Why is the MaPS investment pathway comparison site a disgrace?
First and foremost it focuses decision making purely on cost
This is a clip I did on a search for myself. I did so having been excited by this claim on the MaPS site
This is not a shop around service, many of the readymade investment pathways are not represented – where is the LV Product – where is the Vanguard Product, where are the offerings from True Potential, Open Money and SJP?
Confusingly the site tells me
I originally took this statement to be the reason why MaPS could not be inclusive. But I suspect that MaPS have been bullied by incumbents into including this statement. I would imagine that “deals” could be had with any provider – why the home bias?
Secondly, the basis of the “cost” comparison is deeply suspect. Everyone inside pensions should know that the amount you pay for pension management is much more than the explicit charges disclosed by the platform provider . But the site gives no details of the true cost of investing in these pathways . Instead every comparison gives the same explanation. The first year charge shown …
will take into account the expected charges for the pension drawdown product and the investment pathway chosen and, if applicable, any income you have chosen to withdraw.
But there is nothing on the site that allows the inquisitive purchaser to understand whether the hidden costs are included or a breakdown of costs. This is important because if you want to use the site filter, it becomes clear that the only basis of comparison is charges
You can also sort High-Low on the first year charge.
Not whole of market – not clear on charges – so what about value?
My journey through the site has given me “an idea of what the market looks like” and two ways to compare the market (hi-lo, lo-hi on charges). But I am also being told that I can
Click on ‘more information’ to find out additional details such as the product features and charges, along with a description of the risks and investment objective of the chosen investment pathway option you’ve selected.
Clicking on “more information” does not lead to any objective assessment of the value of the product purchased. It just gives the marketing departments of the various providers an opportunity to show off their compliance with FCA strictures. I have written at length about the inadequacy of this approach
What is iniquitous and disgraceful is that MaPS are making the purchasing experience one dimensional and giving no instruction on value whatsoever.
What is needed is a quantitative approach to value assessment and that needs to be done independently of providers using proper simulations of how these pathways and platforms actually work. This is not as hard as it sounds and I will be putting forward suggestions to MaPS on a way to compare the effectiveness of these pathways based on historic simulations (ex ante). No doubt those with stochastic models could do the same going forwards – though these monte-carlo simulations don’t do it for me.
Similarly, there are independent assessments of the sustainability of funds – ranging from TCFD reporting to Morningstar’s Sustainalitics, which could be employed to provide an insight into the E, S and G of the pathways.
Solutions are available, why aren’t they being explored?
I am increasingly frustrated with MaPS, which will come as no surprise to readers of this blog. The £108m spent by the organisation last year came out of levies which ultimately find their way into the charges we pay for financial products.
The users of those products should be demanding a service from MaPS that is at leas fit for purpose, this service is a disgrace. Someone needs to be held accountable for its delivery.
The best thing that can be said about the MaPS investment pathway is that no-one appears to know about it, let alone use it. It could easily become just another failed project that quietly fades into the distance, unused and unloved.
But investment pathways are the only game in town for those who cannot afford or do not want an advised product. Many non-advised products are providing value and many of those do not make it onto the platform. Those that do are being ill if not misrepresented. Purchasing decisions are being reduced to price comparisons and the price comparisons are dodgy. Solutions that are available are not being explored and no one seems accountable.
We deserve better.