Although there are notable exceptions, most adviser firms, particularly EBCs, focus their attention around delivering services to employers rather than individual members. Services that allow individual members of pension schemes to take control of their investment in DC plans have historically tended to be delivered by the product provider rather than the advice business.
I was very surprised recently when Bluefin shared with me their experiences of the use of functionality they have recently added that allows customers to compare and select alternative funds to the default fund through group arrangements operated via their Orbit pension portal. Since the new services were launched in May around 18 per cent of all members have selected their own investment funds.
One of the main aims of any system must be delivering a quality customer experience. With Orbit, if members wish to join using the default fund they can do so in four simple mouse clicks using an online joining wizard. So scheme members can consider what will give the best value the service identifies which available option will get the greatest contribution from the employer with minimum contribution from the member. As a matter of course, the system shows the default fund chosen and then gives the client the opportunity to choose alternative investment options such as a lifestyle fund or all available funds.
Where members want to build their own bespoke portfolio they are given powerful tools to carry out extensive fund analysis. This includes the ability to compare the current level of risk in the client’s portfolio against various ABI sectors.
The system will show the available funds and provide a range of information including performance. In addition, a ratings and risk section renders a range of information from Financial Express including alpha manager rating, crown rating, OBSR rating, fund risk rating and fund sector rating. From this point the member can also download a range of Bluefin branded factsheets and charts using FE data. Charges are shown for the base fund annual management charge, the scheme discounts and net scheme AMC.
Having selected a possible allocation the member can carry out a portfolio scan, this generates a bespoke factsheet that allows employees investing in a number of funds to analyse their portfolio under a single view. It compares the portfolio’s performance against a chosen benchmark, and provides a breakdown of the overall asset allocation and top ten holdings. Further charts can be generated to examine risk return or fund performance.
Services that allow individual members of pension schemes to take control of their investment in DC plans have historically tended to be delivered by the product provider rather than the advice business
Having selected the funds they want to work with the service allows the member to submit this information electronically to the pension provider to complete the transaction. This functionality is currently live with Aviva and Bluefin will be adding Standard Life and Aegon very soon.
It is clear that Bluefin are particularly proud of the range of products their services can offer including unbundled trust DC, GPP, SIPP, stakeholder, and trust DB. The trust DC module allows users to view up-to-date (daily) pension valuations, contribution and investment history. It allows them to transact online and use the same set of Fund Centre tools.
To be fair I have seen many of the components available from Bluefin before. They originate from the e-Value tools suite now operated by Financial Express, who now want to be known as FE, being part of the business they bought from Towers Watson last year.
Although FE provide data feeds to several employee benefit platforms they tell me they have gone far further with Bluefin. Normally such content has been confined to professional advisers systems or those delivered by life offices. But FE tell me that in essence they have delivered to Bluefin simplified versions of adviser tools for analysing funds to help the individual scheme member to better understand portfolio risk and empower them to make more informed investment decisions when it comes to their pension.
I’m not sure if the user statistics from Bluefin are evidence that the company has clients whose employees are more interested in their pensions, wealthier employees or that those employees are better educated about financial matters. It may well be that the answer is a collection of all three. What I do find interesting however is this clear evidence that given the right tools, consumers will use them. I’m sure there’s an important lesson for the whole industry here.