Advisers throughout the country tell us that the majority of pension scheme members are either unengaged with their employer’s pension or somewhat indifferent towards having a meaningful discussion on it. Not turning up for renewal meetings or showing a sense of financial apathy when they do, are all too common. We could all list the conversations we have all had; “It’s too far to retirement”, “I hear it’s all taxed at drawdown”, “my friend paid into a pension for years and got nothing back”, …we’ve heard them all.
Maybe it is time to reassess our assumptions about member engagement. Is it that these members don’t care about money or their financial future? Is it that they cannot understand the perceived complexities of projections, risk, future value etc.? I think if we scratched beneath the surface, we would see that most are quite financially literate; they actively use the internet to research financial topics, read articles, watch vlogs and probably have a Revolut account. Sounds like a pretty engaged bunch.
Where are members getting information?
So why not engage with their pension? Well, maybe they have no real issue with their pension. They have a rough idea what has been paid in and what they will get at retirement. Maybe they just get their information from somewhere else. They don’t have an issue with their pension but just don’t engage with the way it’s delivered. Are we engaging with members in a way they find insightful? Is the adviser’s brand at the forefront of all their financial decisions? Is the annual renewal meeting alone a bit 1990s?
What brand are members engaging with?
The brand that the member tends to engage with from a day to day basis is often not that of their adviser but instead their pension provider. The member probably has a login to their portal, gets information from their site, uses their interactive tools and even calls their Customer Services. Where is the adviser’s brand in all of this?
The advent of IROP II won’t help the situation. The adviser’s role will be further diluted amidst the range of services that will be provided by Master Trusts. We have seen the experience in Australia, where advisers struggle to get engagement from members who are well served by massive superannuation funds. There, the provision of advice is differentiated into that which is “financial” and that which is “general in nature”, the latter being where no personal circumstances are taken into account. Using a host of tools and calculators provided by the superannuation fund, the average member is perfectly well served with the general advice option and the superannuation fund will happily provide it, without the need for an adviser.
To maximise the potential return from DC pensions and to secure the future relationship with scheme members, advisers here need to ensure that it is their brand that members are engaging with throughout the scheme year.
Brand engagement can only be created through awareness and customer touch-points. Is seeing scheme members once a year sufficient for creating lasting brand awareness? From the ritual Benefit Statement meetings do members really see the scheme adviser as the one to turn to for all their financial needs into the future? Unfortunately, in many cases not. Information is everywhere, available from all sorts of media, whenever and however members want it. Out of sight is out of mind, and if the adviser does not have year-round touch points, the member will get their answers and solutions elsewhere. This is where some advisers fall down in their bid to make the occupational pension a profitable part of their business.
For the adviser the modest income on the group scheme is often far out-weighed by the glitter of the potential of the individual parts. One scheme but one hundred potential clients is the vision when the scheme is being signed up, but reality often disappoints. The odd protection case, a few AVCs and new members along the way, props up what is often seen at non-performing part of the business.
Advisers need to be digitally engaged with scheme members. We might still have filing cabinets in the office but in the eyes of the member we need to be providing a modern engagement experience that they can relate to. Regular touch-points need to be established to continually reinforce the adviser’s brand and create opportunities throughout the scheme year.
Karl O Meara