The Financial Advice Market Review (FAMR) contains a very interesting challenge to the industry, suggesting it should develop a pensions ‘dashboard’ to help consumers understand what they have saved in pensions.
The FAMR document says: “There are currently a number of projects looking at the idea of a ‘pensions dashboard’. A pensions dashboard is a consumer-friendly digital interface that would display information about all of an individual’s pension savings in one place.
“This data would ideally be retrieved directly from providers and would not require lengthy data input by the individual. The dashboard could update in real time and contain projections of pension income based on different scenarios. These projects involve a wide range of industry and Government bodies.”
In our debate and report Robo-Advice – what it means for the sector, the market and its and customers, several of our delegates said such a dashboard could be of great help in convincing people to seek advice and at least consider saving and investing more in a pension. It was deemed a potential boon in engaging consumers for both new automated and existing advice services.
In our initial thoughts and discussions about the dashboard at Space, we think design may be the least difficult part of the project because the technology and the accompanying approach to marketing have made huge strides in the last five years.
Financial services providers and advisers have not quite been at the leading edge, and yet the best firms in the sector have been quick to borrow what works from other sectors, adopting best practice in terms of ease of journey, story-telling, graphical displays and more. In particular, the industry has grappled with and solved many of the challenges of presenting information clearly and concisely about retirement and the options for taking an income.
Pension firms are also increasingly aware of what works best for their customers and clients after a year’s feedback. Therefore, a pension dashboard of this nature is simultaneously the next step and the missing piece of the jigsaw.
In addition, if we want to look to other countries for inspiration, we already have examples that work including Denmark’s PensionsInfo being the most talked about example – probably under the influence of Danish-owed Now: Pensions – though Sweden and the Netherlands have nationally backed dashboards too.
Once we get there, such dashboards can certainly help focus consumers’ minds on retirement. Unfortunately, we also see five big challenges in getting there.
1. The convening challenge
The Treasury says it will convene and challenge the pension industry to come up with the dashboard and has set itself and the industry a target date of 2019 to come up with the goods. It suggests the government wants to avoid having to run another big IT project. This is understandable given the pitfalls and bad PR such projects have attracted in the past, most notably within the NHS.
It is clear the pension industry is capable of working together on different types of projects through trade bodies and even looser coalitions of interest. It will, however, be interesting to see who volunteers time and money to the project – presumably those providers with the most to gain. There is even a small risk of a ‘too many cooks’ scenario though, once again, the government has used the in-house Policy Lab within the Cabinet Office to pull together work and research from different groups across the country.
It has been used to help with work on policy suggestions and policy implementation. This is a different kind of challenge. It can be overcome with a clear strategy and programme of work but, for all the PR pitfalls, we cannot help thinking the design of the project might have been better being run and commissioned as well as convened centrally.
2. Data from the industry
The issue of the data to be fed into any dashboard is a huge challenge. The quality of the data and ease of access to valuations varies massively across financial services as any IFA will be well aware. Indeed, advisers marvel at just how difficult it can be to get a valuation.
Some closed firms are run with a very low spend on administration. Pension money is also invested in countless different types of firm, from giant life offices to small Sipp providers. If they were all ABI or TISA members then it could be easier. Of course, many people’s pensions are held within company arrangements or in master trusts.
As the lifetime limit falls, the HMRC has also offered different investors several layers and types of protection, all complicating the required data. A really effective dashboard would require minimal inputs from consumers and real-time delivery of some of it could prove to be a pipedream. At the same time, it is surely time all pension firms raised their game on providing valuations and other information that could impact their customers’ retirement income.
A really effective dashboard would require minimal inputs from consumers and real-time delivery of some of it could prove to be a pipedream. At the same time, it is surely time all pension firms raised their game on providing valuations and other information that could impact their customers’ retirement income.
3. Data from the government
Is the government in any position to make demands about providers’ data? One good thing about all this is the Government will have to make sure data about the state pension and the implications of various legacy entitlements through SERPs and S2P become more readily available and are more accurate. For the moment, to the frustration once again of IFAs, you get a rough calculation.
Factor in the option to retire later and, perhaps as some MPs want – for some women caught out by the increase in the retirement age to retire earlier and sacrifice some entitlement – even the state system does not look too easy to incorporate. The prize is significant, however, and would likely protect the Government from criticism that it is not informing people properly about pension changes.
4. Projections are all over the place
For a dashboard to work, it needs to help people project a potential income. For private plans at least, that means using a projection. But a recent report by CTC Software suggested all manner of projections are being used by pension providers for both accumulation products weighted to riskier assets and for more cautious drawdown strategies.
The consultancy suggested projections of 5% for drawdown were very optimistic. Customers with several pots could be receiving very different information from different providers. At the same time, this project could offer an opportunity to set a standard.
5. The engagement challenge
Many of the panellists in our recent roundtable saw a pension dashboard as providing an opportunity to increase customer and client engagement. It will not, now, be hosted by the Money Advice Service, which might have been a natural home though it could sit in the planned combined Pension Guidance body promised in the FAMR final report.
Will it sit as part of the ‘.gov.uk’ set up? Certainly advisers and providers would love to link up to a site that had the government’s seal of approval. It would need some advertising but, if it is effective and easy to use, then we do not see why many people would not use the system. It is not quite ‘if you build it they will come’ – but it is not far off it.
Certainly the Danish system is embedded in the consciousness of the Danish public. But could it drive leads? In an ideal world, the website that hosts the dashboard could also provide a means to drive consumers on to where they could transact.
This was envisaged in the original ideas put forward for a centralised national guidance service – long before it mutated into the Money Advice Service.
Alternatively, could providers and advisers ‘white-label’ the dashboard? Whatever happens, a dashboard would be a significant boon but ensuring it works with the industry and does not sit in splendid isolation could make it even more effective.
All of the above represent significant challenges but imagine if the public, rather than saying, ‘I have no idea how much I have in my pension’, could log on and find out in a few minutes. The prize is significant.
Marilyn Cole is managing partner of design and technology agency Space
Selected quotes on the dashboard from roundtable panellists |
| * LV= head of policy Phil Brown: “It is right the review recommended the development of a pensions dashboard as the benefits for consumers are clear. However, the target date of 2019 is too late and we think this could be delivered sooner. A dashboard could support robo-advice by providing most of the information consumers and advisers need online and in one place.” |
| * AE in a box director Chris Daems: “A pensions dashboard is a good idea as it allows for users to have visibility and accessibility to all of their pension pots. However I think the concept is at its most beneficial when all financial products can be delivered on a dashboard together with how these technical elements link to a client’s financial plan. I suspect we are a little away from this and it would take broad collaboration but, ultimately, this would be the ideal.” |
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