Guidance is an opportunity, not a threat

So it could not be any closer – April 6th marks many things but perhaps none will be so momentous as the new pensions’ environment that we will be living and working within.

Stuart Wilson
2nd April 2015
stuart wilson lla

For the financial services market it has been an extraordinarily rapid move over the last 12 months since the plans were announced and, even with many creases still to be ironed out, there’s no doubting that this fundamentally changes the ‘game’ and heralds the next era for later life living and later life advice.

Not that you would necessarily know it from certain factions of the advisory community who have resolutely stuck their heads in the sand in the apparent misapprehension that it will be business as usual after April 6th. This is a game-changer and, just looking at the introduction of Guidance, we are now seeing a real shift in the way retirees engage with, not just their pension(s), but also how they fund their retirement and all the responsibilities they will have over those years.

I’ve reiterated this point many times, but it is still worth repeating – Guidance should not be viewed as a threat but an opportunity. It is an opportunity for advisers – be they full 360-degree later life or pension or wealth or equity release – to engage or re-engage with the consumer. That’s right, the consumer. Remember them? I often think that the needs of the consumer are overlooked when we have industry practitioners desperate to talk amongst themselves on numerous issues but not willing to talk to potential clients.

The reason for my optimism is simple. Guidance will raise far more questions than answers for retirees and they will need advisers to offer them the answers and the solutions. But it will also present a far greater number of choices to the consumer than they probably thought possible, and if there’s one thing we should know by now, it’s that when retirees are confronted by choices, they often don’t make them. Back in the day, retirees had essentially two choices, choose the annuity offered by their pension provider or sell it on the open market. Most retirees couldn’t even make this choice and opted for the default option. Now, the choices are far greater in number and we’ll have 500,000-plus retirees looking and needing answers.

I attended a recent round table event, ostensibly for equity release advisers but open to all, where I spelt out how the advisory community can benefit from the changes but they will need to engage with the consumer at both the pre- and post-Guidance situation. This can be done through delivering education and information, firstly about what Guidance can and can’t offer, and also about the potential problems and solutions available to retirees. The latter part of this – solutions – is vitally important because we can’t be drawn into discussions (at this stage) of product T&Cs, otherwise consumers will be turned off, but what we do need to talk about is the solutions that are available. If not, then the consumers will stay consumers and won’t become clients.

I was immediately pulled up on this by one adviser who suggested he was already providing this service to his clients, he was not bogged down in products but offering quality advice and solutions. I don’t doubt this but the point which was lost was the fact that by the time he was talking about ‘his clients’ the job was done – my point was about converting consumers to clients and the stage when this could best be achieved. If they are already clients, they are already engaged and you’re probably sat in front of them providing the right advice, but what about those who haven’t reached that stage? How do we move them from, for example, having Guidance to being clients? What signposts are we offering them to our services? And how can we best utilise the new changes to show more consumers the benefits of our advice?

This is the point about education and giving people what they understand. To my mind the profession has been far too focused in the recent past on qualifications and not enough on consumer needs. The new regime gives us the opportunity to show our standards, our qualifications and our expertise but also to really engage with the consumer on what advice is, what it provides, and how it can best help them throughout their retirement years.

If we can successfully do this then we can ultimately tap in to the significant demand for advice that Guidance will generate and we will be at the forefront of helping retirees across all their financial services needs not just in the immediate accessing pension aftermath but hopefully through their entire retirement period. With this opportunity up for grabs I believe now is the time for advisers to ensure their proposition is as comprehensive as it could be and to begin the process of engaging with a demographic which will need advice like never before.

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