Hawkins: Our research shows there’s a clear opportunity for providers to take a more prominent role and deliver an outcome-based model to their members

I don’t get it. What does this statement from the very good Jonathan Hawkins mean? Providers don’t need to deliver “outcome based models“, people want pensions.

Jonathan was speaking at PASA’s conference, I wasn’t there and I have Jasmine Urquhart to deliver this report

Almost three-quarters of workplace pension savers want digital financial advice from providers to help get the best retirement outcome, research from Bravura Solutions (Bravura) has found.

The study found that 73% of the 2,000 respondents would use a digital advice service if offered by their pension provider. Some 72% stated that lack of advice was a blocker to social mobility – a key goal of successive governments.

An overwhelming 84% said they believed that more people should have access to digital or financial advice to achieve better retirement outcomes. (editor bold)

What kind of people are we talking about here? Are they members of DC savings plans or DB pensions which pay pensions at retirement?

Members thought providers had more of a responsibility for educating people about their pensions (55%), compared with anyone else – including the government’s Money Helper (49%), employers (46%) or schools (36%).

The findings come as the Financial Conduct Authority (FCA) is working on its Advice Guidance Boundary Review which will set a framework for providers to give targeted support to customers for the first time.

I’m sorry but I don’t see what the FCA has to do with advice on pensions for most people. Most people are in the State Pension first and foremost, many are in occupational pensions from the public and private sectors which need help from administrators but by and large default to agreed retirement ages , pay pensions to spouses and increase in payment at rates established by the scheme. Actually, the financial services industry would like to make life a lot harder so they would have advice to deliver.

Bravura’s Pensions 2045: The Voice of the Saver examined how people are interacting with their pension and planning for retirement.

Alongside a desire for digital advice from providers, it found scheme members want self-service options and digital communication but 41% of providers still rely on letters by post.

Additionally, 75% of members do not have access to retirement income estimators, savings calculators, and goal trackers, despite these being the most in-demand technology members want access to, the technology business said.

Bravura propositions lead for Europe, Middle East and Africa Jonathan Hawkins said: “Our research shows there’s a clear opportunity for providers to take a more prominent role and deliver an outcome-based model to their members.

“It’s sad to see that most workplace members don’t have access to crucial retirement planning tools, given we’re well over a decade into the UK’s auto-enrolment journey. It, unfortunately, shows that we still have a long way to go to make our industry more competitive and focused on the needs of savers to encourage engagement.”

The majority of people I know – of my age – do not want to engage with their pensions, they want their pensions paid to them as they are supposed to be.  They want to be engaging in all the things that pensions bring – they are the “outcomes”.

 “Dashboards will undoubtedly be an important step towards effectively modernising the UK’s pensions sector, and the industry needs to use this as a springboard to find its place in the open finance ecosystem and all the benefits it will bring to consumers.”

I think I understand what this means, but is it really right to refer to “members” as “consumers” and is the pension dashboard going to make the difference to “outcomes”?

Hawkins added: “If you add to the mix Collective Defined Contribution and potentially the chancellor’s pensions mega schemes, many schemes, providers, third party administrators (TPA) and master trusts could quickly see their legacy business models go up in smoke without the appropriate investment in technology to create better member outcomes and lower costs to serve. No provider, master trust, TPA or scheme wants to be the pensions equivalent of ‘Blockbuster’ when consumers want the pensions ‘Netflix’.”

The reality is that most people want a pensions system that is not Blockbuster or Netflix but the means to get them a good later life. We really need to go back to what people expect from their pension and focus on giving it them.  Big pension schemes are needed to give value to savers, a collective approach reduces the need for individual advice as we collectively get the same thing.

Pensions such as the state pension scheme, government pensions for the public sector and defined benefits for those in the private sector are functional , rules based and do not need advice, they just need modellers (as Jonathan says).

We should not be shocked that 84% of people tell Bravura they need advice but they do not need a financial adviser to give it. They need people who tell them how their choices work and the differences including options make. We have these kind of decisions to make in all the big choices we make and if we can’t make products that people can use with confidence, then we should be asking ourselves what are we doing.

There will be a small number of people at retirement who will need financial advisers and will pay for that advice but I suspect that the 84% mentioned in this article are the percentage of people who want a pension set up for them with the help of digital or manual support that they don’t have to pay for.

Jonathan gets this