Articles - Technology & Online: Key roles in a new world

By Graeme Bold, Head of Workplace Proposition, Standard Life
When the Chancellor announced his plans for future freedom and choice in the retirement market, this was welcomed by all and seen as a positive opportunity of putting us all firmly in control of our retirement income and specifically modelling this to suit our individual needs and lifestyle. However, hidden challenges lie beneath the surface which must be overcome to realise the full potential of the reforms.

  •   Post-auto enrolment, more people than ever are saving into pensions in ever-increasing numbers.
  •   Post-RDR access to advice has become more constrained with adviser business models focussing on people who are more willing to pay for customised face-to-face advice. Associated innovation in online solutions are required fill this advice gap.
  •   Having spent their entire working life accumulating a pot of money, people now face different decisions and dynamics to determine the best options for decumulation. Increased choice and flexibility can create uncertainty if people are not sufficiently informed to make decisions about their financial future.
 Therefore, as more people approach retirement they will need support, guidance and advice to understand the myriad of options open to them, and to determine what best suits their needs, but access to traditional face to face advice is less accessible.
 We recently polled a group of 800 customers to determine what they are looking for:
  •   Reassurance: Those with pots of money between £15k and £100k (the majority of savers) need guidance and support most, and are the most anxious that they may not have enough in retirement.
  •   Help and support: Expectation pension providers will give clear information on options with two thirds expressing confidence that they can make decisions after receiving written/online information.
 Freedom and choice is great, but brings greater responsibility for members to choose appropriate options. Employers want to remain paternal and provide access to a solution enabling employees to achieve best possible outcomes, but as an
 employer are not directly responsible for decisions taken. According to a Mercer Budget 2014 client survey, ninety percent of trustees/employers expect to either outsource post-retirement solutions to a third party or permit members find
 their own way within five years. Effective engagement and easy access to high
 quality online education and guidance will help people determine what best suits their needs and give them the confidence to act.
 Neither of these are new topics, but a truly effective online solution should consist of sophisticated, behind-the-scenes technology which ensures a truly customised journey presented in an intuitive, engaging and easy-to use way. Our research showed customers may become disenfranchised if they are not communicated to in the way they want. Customer centricity is key and information must address individuals’ needs. A web site with the
 same static text for all, without taking into account individual circumstances, will simply not suffice. A good solution should allow people to explore their options fully while ensuring there are guide rails in place to stop wrong decisions being taken.
 The process can be equated to ten-pin bowling: having the side buffers up to provide protection to ensure you still knock the skittles down, and maintaining the choice to project the ball down the lane in the manner and speed of your choosing, but safe in the knowledge it won’t go off-track and result in a bad outcome. We have identified several key components of a market-leading online solution:
  •   Easily identify best option. If not intuitive people may choose inappropriate options, take income in a non-tax efficient way or run out of money.
  •   Bite size chunks. Don’t overload people with too much information at once. Focus on what’s key to making the right decision, ensuring personalisation keeps information relevant for each individual.
  •   Pop-up features. These serve as reminders of the impact of decisions, and positive click-through is required to ensure understanding.
  •   Playback features. Outline key decisions and impact before the accept button is pressed – akin to Amazon or online banking.
  •   On-going regular reviews. The provider should conduct these at pre agreed times in order to ensure individuals ask, “Is this still the right solution for me?”
  •   Always available pre / at / post retirement. Choosing an annuity was a one-off choice.
 People will now revisit their retirement options and income at various times to ensure decisions are still suitable or they will make new choices based on lifestyle changes. Information should be saved and stored for each member so it is available whenever they need it.
  •   Come back later. Stop at any time and save progress, allowing the user to take a break and consider their options offline without having to restart their online journey.
  •   Holistic. Allow people to factor in their multiple pensions into retirement decision making.
 Scalability should drive the technology underpinning guidance. Providers should develop solutions that are customised and relevant for each individual user. Different people have different needs. Some want direction in terms of what a suitable option may be based on their specific information, whilst others may be happy to make their own mind up with no assistance. It is imperative that solutions cater to this “Do it with me / Do it for me” approach. Part of the Chancellor’s plans was based on the fact he trusted people to make the right financial decisions, whereas more recently we have seen other ministers say “some people will get it wrong”. If we allow the later to happen as an industry we will have failed in our moral duty to help provide best possible outcomes for customers.
 Intuitive and truly customised online support and guidance is the key to success. It will help people to get it right and will ensure the Chancellor’s vision is achieved.

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