One month to go - preparing for pension reform

To be fair, there are some significant milestones to be met if the market is going to be in any fit state to deliver on the reforms and I suspect that full compatibility from day one is probably beyond even the most diligent of firms.

The ABI in particular have been very vocal recently in suggesting that both the Government and the insurance industry are not prepared for the handover citing examples such as the fact the Pensions Wise Guidance service doesn’t have a phone number yet, there is a lack of clarity over how the Guidance interviews will work and how long pensioners will have to wait to get a face-to-face session, plus there is a lack of understanding about how insurance firms should deal with customers going forward. There is no doubt that a lot of the specifics around the changes and the system pensioners are going to encounter post-April 6th remains unknown.

Certainly, in this situation one can feel a large degree of empathy for those pensioners who will probably have seen the media ‘noise’ around the reforms and, what they might be able to do with their pension, but have little idea about what they should do next, how they understand what those options are, and how they access them. How many of these individuals would currently describe themselves as ‘Pensions Wise’? Perhaps only those who have regularly received advice over the years and will currently be rather more confident than those who are coming to guidance/advice for the very first time.

The good news is that the ‘Pensions Wise’ website is up and running and contains some basic information but it is by no means comprehensive and one wonders what extra information might those providing Guidance actually be able to provide pensioners with anyway. Will those guiding pensioners simply be providing a face to face run-down of the options already outlined online or will they be able to go slightly further? Are they even allowed to go further? 

There also appears to be a disconnect between what pensioners expect from Guidance and what they understand as being ‘advice’. A recent survey by Unbiased.co.uk revealed that 22% of consumers though the Government would be offering ‘advice’ rather than ‘guidance’ and one can again sympathise with this view, given that in common speech both tend to mean the same thing. 

However, this is certainly not the case in financial services and Unbiased have a handy table available which can be found here which outlines the differences. Advisers active in the later life space might wish to disseminate this to those individuals who are approaching this process for the very first time. Essentially, Guidance is an overview of options and nothing else, whilst advice takes in both this and the assessment of an individual’s circumstances; recommendations; implementation; ongoing support, etc. It’s certainly many steps removed from Guidance and consumer education and communication re: the pension changes should certainly focus on this key message.

The Unbiased table is a simple run-down but may be incredibly effective to highlight to potential new clients what they will and won’t be receiving via Guidance. Don’t get me wrong, I am a supporter of Guidance provision, as long as the individual is clear about what it comprises, and I think the advice profession has a duty to make sure it is easily accessible to those individuals coming out of Guidance. It’s the reason why we launched ‘Guidance plus’ which allows our Later Life Academy members to offer a free, initial assessment to individuals which clearly outlines the next steps for pensioners with the focus on recommendations and delivery.

Let’s not forget that Guidance will not make the decision for the individual – it will (hopefully) signpost advice as the next step and, as we have continued to stress, this is where later life advisers need to be positioned in order to offer those services. This approach, combined with a strong commercial proposition, should help advisers deliver in all manner of areas for those who have actively sought advice. It’s not just all about their pension needs but areas such as equity release, will-writing, legal services, funeral plans – the list goes on.

So, with only a handful of weeks left, later life advisers have a strong opportunity to develop an approach which puts them on the next step post-Guidance. The Academy can certainly support advisers’ later life advice proposition and help develop it to target those many individuals who will be leaving Guidance actively seeking quality advice. Now is the time to make sure you are their first port of call.