Last month I looked at the implications of FCA paper FS 21/7 for the workplace benefits market. When designing a strategy to implement this, it is also important to explore changes in how advice firms are engaging with clients.
Historically, the practice management system has been the most important technology within an advice firm, so the natural point for integrations with pensions providers. In a post-Covid world we are seeing this change substantially .
The pandemic has dramatically catalysed technology adoption by advisers. Many have found virtual meetings a highly effective way to engage with clients and are asking themselves what other forms of technology could enhance their operating methods.
In addition, as advisers have not had paraplanner’s sitting a few feet away, they have had to become far more self-sufficient in using their technology. Consequently, they now better understand how the systems work and how to get the most out of them.
As advisers increasingly embrace technology, their client portals are becoming the digital representation of their business to their clients. Equally as more and more people are managing a growing amount of their lives digitally, so these client-facing services will become the most important part of an adviser’s technology proposition.
This brings particular challenges in the workplace environment. In the past there were many firms who, having placed the scheme, were happy for the pension provider to deal directly with the individual members. Others however saw one-to-one meetings or member seminars as a core part of the service proposition.
As a result of their new technology capability, I see advice firms revisiting an old argument, who owns the client? Over the last 20 years it has been become normal practice for pension providers to deliver online access to end scheme members.
Going forward however, as advisers deploy their own increasingly powerful web portals, many will want to use their own portals rather than direct the members to a pension provider’s site. This is especially valuable if the adviser is delivering other benefits such as group risk to the same employer’s staff.
Such considerations will have a growing impact on which providers are supported with new business. Pension providers who can support an adviser’s client portal will clearly be allies. Those who can’t may be seen as foes, trying to cut out the adviser.
The emergence of practical low-cost advice and guidance services for members with modest assets via automated solutions will be a further catalyst. Many advisers will increasingly see such members as a valuable additional revenue stream.
A couple of years ago Aon introduced an app for members of all the schemes it operates. This enables it to offer third-party online services in a single integrated Aon-branded environment. At launch it was explained to me that any pension, group risk or other employee benefit provider that wishes to access Aon scheme members would in future needs to do so via their app. I expect far more employee benefit consultants and corporate advisers to adopt a similar approach to this in the near future.
In practice pension providers are going to need to support both their own portals and those of their adviser business partners. Advisers who prioritise having their own digital presence are not going to want to have clients use their own portal for part of the relationship and then send them off to pension providers sites for other actions, when they could deliver a fully joined up experience. This will necessitate pension providers deploying components that can be delivered through their adviser business partners sites. This will require a level of technical development that, to my knowledge, no current UK pension provider can offer.
That said, I am seeing certain key players in the advice tech market move to being able to support such capability, especially those who have both significant practice management and client portal functionality. It will be crucial for pension providers who wish to retain market share with advisers to build deeper relationships with these firms. Indeed, those without this capacity may see large amounts of their established workplace schemes under threat of being moved away. Bizarrely there are still some master trusts with virtually no adviser focused support, such schemes are effectively begging to be moved.