The delivery of pension dashboards will be the iTunes moment for financial intermediaries – dashboard strategy should now be firms’ number one priority says F&TRC director Ian McKenna
With work on the pension dashboards project beginning to achieve significant momentum it is important for advice firms to start preparing their plans to offer such services. Nowhere is this more important than the corporate advice market, the sector that potentially has most to gain from both dashboard services and automated advice.
In reality, forms of dashboard services already exist and have done so for several years. The work the Treasury is driving will ensure consumers get complete services, with the full depth of information they have every right to expect, far more quickly. Without government intervention it is likely that some organisations, particularly closed book and defined benefit schemes would have fiercely resisted making comprehensive information available to consumers.
Sadly there is some evidence that a few are still trying to constrain progress and transparency. Unless I have misjudged the determination of the Treasury team I’m working with, such efforts are futile. Now is the time for organisations to embrace change and the benefits the dashboards project can provide to consumers and themselves.
The delivery of pension dashboards is going to be the iTunes moment for financial advice. By making detailed information, which is normally costly and time-consuming to obtain, reliably available within hours, if not real time, will make it viable for organisations to deliver extensive financial advice to millions of consumers at far lower cost. This will hugely grow the market for advice and address one of the primary challenge of the Financial Advice Market review, making the advice consumers need more accessible and affordable.
This is going to represent the greatest growth opportunity in the long term savings market we have seen in decades – it will dwarf pensions freedoms. There is no doubt in my mind that the most important strategic project in any pension provider or financial adviser firm is now how they will support and deliver pension dashboards. These will become the first point of contact for the majority of consumers with whoever they choose to obtain their long term savings advice from. By 2019 any organisation that has not started to deliver a pension dashboard will effectively have taken the decision to close down for a period of years.
Actually some of the biggest names in the workplace pension arena already offer extensive dashboard capability – I’m referring of course to Aon and Mercer with their Bigblue and Harmonise initiatives. There is nothing currently available in the market from any life office that, from the perspective of an employer who wants to deliver an outstanding experience for their staff, comes within a marathon never mind a country mile of what is on offer from these two organisations.
In terms of member proposition, such is the lead of the big two that any employer large enough to be able to deal with them that wants to deliver an outstanding member experience probably only needs to decide which of the two to select as their adviser.
This is a very unhealthy situation for the rest of the corporate advice market and there is an urgent need for more firms to embrace the level of functionality the services provide. Many technology providers including companies like Intelliflo, Moneyhub and Cleo are well positioned to provide the technology to meet such needs. Perhaps fortunately for the rest of the corporate advice community Aon and Mercer are facing challenges which may distract them and give others time to catch up. Tobin Murphy-Coles, the creative guru behind Bigblue has now exited the business. If stories of the company disposing of its Hewitt arm lead to a transaction, this could be an even bigger disturbance.
Mercer has recently acquired Thomson Online Benefits, which will lead to an inevitable and significant integration program. In doing so I really hope Mercer keeps the best of both solutions. There are some great elements in Harmonise that I understand are not available in Darwin. While building a best of both solution will be more time consuming, for me it is the best approach.
A recent study by Accenture identified that 60 per cent of UK consumers are now prepared to use an automated advice service for retirement planning. This is clear evidence that the time is right to deliver such services to members of workplace pensions schemes.
Corporate advice firms that wants to be able to fully capitalise on the considerable benefits the Pensions Dashboards project will bring should be moving now to deploy dashboard-like capability, not waiting on the sidelines until 2019. If I were in their shoes I would want to be able to offer some kind of dashboard type service by the end of this year.