Who to believe?
Both Scottish Widows and Standard Life are advertising their products with different messages but with the same pictures, pictures of happy clients being supported by human beings and by financial technology.
The financial conundrum for insurance companies is how to differentiate themselves when they are all doing much the same thing.
It is in the interests of commercial providers of money to policyholders and members of occupational schemes they manage to have happy customers.
In this case we have two Edinburgh based organisations with large books of policyholders and fast growing master trusts. Scottish Widows is growing its master trust by buying out Zurich and bringing in Lloyds Bank’s “Your Tomorrow” staff DC pension scheme, Standard Life has recently bought Aegon’s Master Trust along with Aegon’s GPP – that was purchased from Scottish Equitable and more recently Black Rock’s.
Scottish Widows choose to market themselves as offering a good experience(getting money) which is let down by lack of support turning pots to pensions.
Standard Life turn the problem around, suggesting that savers are let down by not getting the support they need to get their money as they want.
But the message in the pictures is the same. There will be happy customers if technology delivers what insurers want; devices are hand held by customers helped by an adviser next to them. This is the message that insurers want to be promoted.
There will be those who are sceptical of this experience. It is hard for large and fast growing pension providers to manage the fintech revolution. Smaller alternatives providers such as Pension Bee can manage their books more easily as they cover only the last ten years of saving. Consolidation of back books has to happen for the good experience to be universal across the books.
This race to consolidate will not cross the finishing line any time soon. Whether we get the pension dashboard in 2027 or maybe 2028, it will come and there will not be a universally good experience for Scottish Widows and Standard Life. Both are priming their customers in different ways and these reports are not aimed at members but at those who intermediate between life company and savers (often represented by employers). I suspect that these reports are also aimed at regulators and legislators.
We are moving from “fee compression” to “value for money” as the way that insurers want their products to be judged and here what can be manipulated is the perception of those who make judgements of intention. Scottish Widows employ a cheerful optimism, Standard Life a presbyterian style seriousness. But these are marketing things.
The reality is that you are getting the same experience from the large insurers who offer a master trust and a group personal pension (apart from Royal London who missed out on MT). Guys like Graeme Bold move from life company to another as they are safe pairs of hands. Graeme has mainly been at Standard Life, is now at Scottish Widows and spent some time at the jam in the sandwich at M&G.
This is what makes the large insurers successful, they are dependable and though the marketing differs, the product is much the same. The life insurance sector has a substantial part of the workplace pension market, has substantial back books and it has no intention of moving into collective pensions.
Not since the days of compulsory annuitisation has there been a simple way of paying people the money in retirement and the pensions dashboard is not going to make the choices now open to savers on “decumulation” any easier!
