I have , rather heavy-handedly, objected to the trivialization of “retail” pension plans such as Pension Bee, painted as incapable of delivering value for money on Nico and Darren’s VFM podcasts.
There is no place for such institutional hauteur , the 200,000 people who have transferred £3.8bn into Pension Bee are not idiots, they have not been scammed. They have chosen to have their money looked after by the Beekeepers rather than keeping it in legacy occupational and personal pensions and and sometimes “state of the art” workplace pensions.
These are not trivial numbers and Pension Bee is now listed on the UK stock exchange, a properly capitalized pension provider that is known to millions through its powerful advertising.
In keeping with the responsibility it has to its current and future savers, Romi Savova gave a measured and thoughtful series of responses to Nico and Darren that made for sensible listening.
You can listen to the podcast from this link
The contribution that Pension Bee are making to the VFM Framework relates to the Quality of Service Test, to which Pension Bee have give much thought. I have seen Romi explain to the DWP first hand and her arguments on the metrics that can provide a quantifiable measure are compelling. They are based on Romi and her team sitting in a single room with the support staff who handle saver’s queries and deal with their frustrations with poor service.
Of course the value of good service is not just of benefit to savers. Pension Bee attract new business by making saving attractive. Nest is able to accept transfers and will accept savers who have no employer (the self-employed in particular) but it is Pension Bee who are winning the hearts, minds and pension wallets of the independent saver. In the Podcast, Romi makes it clear that the commercial development of Pension Bee is based on the value it gives from quality of service as well as the outcomes of that saving.
My firm has monitored the outcomes of this saving and it has since outset provided above average outcomes on the majority of the strategies it offers its savers. Pension Bee have never been anything but transparent about the charges on their funds and you can often buy the same funds cheaper on workplace platforms. But – crucially – those platforms are exclusive and have yet to find ways to compete with Pension Bee.
The alignment of interests between Pension Bee and its consumers is best demonstrated on its Trust Pilot – which anyone interested in client management should study intently.
You can read the warts and all interractions with customers here.
Getting serious about consumers.
Romi didn’t give us much Bio, she founded Pension Bee when she found that despite being a financial services analyst for Morgan Stanley, she could manage her own pension finances without having to resort to reams of paper and the services of a financial adviser.
She wanted a better way and started Pension Bee. Pension Bee is a product of the failure of our occupational pension system to help people -whether sophisticated or not. Which makes listening to this podcast an absolute must. Without Pension Bee , we will not have a decent benchmark or test for value for money. Without Romi, and her bad experience of occupational pensions, we wouldn’t have Pension Bee.
Hats off to Nico and Darren for making this podcast, it is required listening. Romi Savova has a lot to teach us all.
After word; Pension Bee and Brentford
10 years ago to the Month, I watched Yeovil Town FC defeat Brentford at Wembley to be promoted to the Championship. Last month, Yeovil were relegated to the National Conference South and were unable to pay staff and player wages. Brentford meanwhile are on the fringes of European football, a star team in this year’s premiership. Brentford has a new stadium and a new sponsor – Pension Bee. Pension Bee was founded in 2014.
Brentford are a well managed club and Yeovil aren’t and they are now 6 divisions apart.
Of course you pay ;ess than the cost of a Brentford ticket to watch Yeovil but you don’t get Toney & Co and you get a quality experience at the new ground.
But a fellow Glover and value enthusiast points out on Twitter,
Brentford charge £450 for a season ticket Henry, that’s proper VFM.
— DTH76 (@DidcotCSC) May 6, 2023
Unsurprisingly, Brentford attendances are now twenty times those of Yeovil’s.
And what’s more, Brentford fans spend their time working out how lucky they are, not moaning like their North- London rivals!
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- A glover living in Brentford (the old ground in the distance)
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- The Bees – founded a few years ago.
VFM needs to have a wider view otherwise you are back at price as the lowest common denominator in the understanding of your audience.
Pensions are now too complex to navigate without a knowledgable mentor who has a clear understanding of the client’s total position, objectives and milestones.
Back in the day my own practice had three formal meetings a year plus any others required during periods of change.
We worked on developing the client’s three balance sheets
Personal, corporate and beyond work
The first meeting would be a general review and to decide which balance sheet required action the second reviewed the proposed action and the third executed the plan
Today an example of the personal balance sheet would take into account the disturbing treads in U.K. health
https://www.ippr.org/files/2023-04/1682577258_healthy-people-prosperous-lives-april-2023.pdf
In the summary of progress we would identify income producing assets and income absorbing items. Dealing with waste and the “stuff” needs to be an ongoing project as one day there would be no income from work. ( we only had two treasury ministers as clients)
This model required a known cash flow for the advice business of around 40 bp on the investment portfolio and an average client with £2M of qualifying assets
Each adviser could service 50-60 clients but this optimum was never achieved an settled around 45
I recall one family group client who has both fixed and primary protection they had filled out the applications for workplace pensions provided by HR fortunately they were easily persuaded that far from being beneficial less in this case would be more. I am not sure how this advice could be accounted for in a VFM score
35 of those clients would have an AgeWage score of 100 if tested today including myself and my deceased wife’s account.
Thank you Henry for all the hard work you put into these blogs but wellbeing needs a wider view of the client’s total position and a lighter touch on the tick box reporting. The U.K. is in real trouble when improvements to an individuals position comes not from productivity gains but at the expense of another probable less fortunate individual.
Happy to continue to be an outlier as you once described our methodology