Advice guidance boundary review will ‘empower consumers’, says FCA chief

The chief executive of the Financial Conduct Authority, Nikhil Rathi,?is correct when he says say that pensions as a sector is “marked by inertia, a lack of consumer understanding and ridden by fear” but I think his assertion that the advice guidance boundary review, in of itself, will “empower consumers” to make effective financial decisions is somewhat flawed.

It is a necessary condition, that will facilitate the masses to get the support they need and therefore a really good thing, but it is not a sufficient condition. It will be a great facilitator but the industry will then have to deliver much improved engagement to realise the benefits of the new regulation.

According to recent Pensions Policy Institute research, “What could effective pensions engagement look like?”? current engagement levels are low or very low for 51% of the target population.

There are some simple steps the industry can take to drive much improved engagement:

• The customer should have a clear path of the steps they need to take so they are not overwhelmed and so they can gain satisfaction as they tick things off the checklist
• They should receive support when appropriate
• Segmentation should be used to personalise the journey to make it relatable
• Life events or stages should be used such as pre-, at- or in-retirement, with different customer journeys, content and tools for each
• Communications should be simple, jargon free, timely, in bite size pieces and in the format preferred by the customer to make them easy to consume
• Customers need rewarding for their efforts (they see retirement tools as high effort however much we simplify things) through good, early value exchange and/or gamification
• We should play to the customer agenda by?looking at all assets held by them,?helping them with non financial lifestyle planning, and?providing support post retirement and not just pre retirement

We do all of this at Life Moments but I would say that wouldn’t I? Fortunately, we have the data to back up that statement:

·???????? 87% of consumers self-reporting a knowledge improvement following financial education

·???????? 81% of asked users find that one of our propositions has been very or extremely helpful in supporting and guiding them

·???????? And, as a consequence, 62.5% of consumers reporting an improvement in financial confidence

It is the improvement in financial confidence that will lead to consumers feeling empowered and act by engaging with new propositions created by the industry and facilitated by the advice guidance boundary review.

Please let me know if you would like a Retirement Coach demo and to learn more about our customer feedback.

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