"Naturally, with meetings now simplified and in many cases less formal, those put off by complicated and lengthy financial advisory procedures may be more inclined to seek advice."
Indeed, the director of policy and advocacy at the Pension and Lifetime Savings Association recently told the Work and Pensions Committee (WPC) that a combined product for anyone reaching retirement age could replace needing to provide advice. The combined product would be a mixture of cash, investments, and guaranteed income capable of creating a retirement strategy, therefore foregoing the need to seek advice on how to approach one’s pension.
Whilst it is right that the industry strives to make receiving advice a more straightforward process and, therefore more accessible – a combined product is unquestionably not the way to achieve this for several reasons.
Firstly, a significant step in creating a successful retirement strategy is taking into account a person’s individual circumstances to create a long-term plan. A combined product that operates as a self-navigation system of robo-advice fails to do this, instead creating a retirement plan based on short-term goals with minimal human intervention.
Not to mention, combined products do not offer adequate transparency. This can lead to a lack of understanding amongst the public of what the product can achieve and the impacts of factors such as longevity being unknown to the majority of the population. Such confusion can cause the process to become more complicated than it already is.
These ideas come and go, but at the end of the day, there is no substitute for independent financial advice. That said, the industry should not get complacent. If the last two years have taught us anything, it is that independent financial advisers are willing to accept the need for change to ensure advice is accessible to all.
More accessible advice
Financial advisers were forced to adopt new methods of advice when social distancing regulations meant that they were unable to meet clients face-to-face throughout the pandemic. Instead, they conducted virtual consultations throughout the pandemic.
And that switch to digital is almost certainly here to stay. Research from VitalityInvest suggests that the majority (74%) of advisers now expect virtual meetings to remain a part of their day-to-day operations.
And as many industry sectors have discovered, there are major benefits to transitioning to tech practices, and this applied to financial advice. Evidently, remote practices have modernised advice, enabling a more efficient and streamlined approach to the process. Clients could now have a meeting with an adviser located anywhere in the country without factoring in the time and effort needed to travel for traditional in-person interactions.
Naturally, with meetings now simplified and in many cases less formal, those put off by complicated and lengthy financial advisory procedures may be more inclined to seek advice.
The next step forward
In order to continue the progress the industry has made, there will need to be a clear focus on future improvements in tech. This will be key to overcoming a lack of engagement in retirement plans.
In a study into the state of pensions, Capita found that 61% of the 2,017 employees who took part were confused by pensions, and 72% weren’t engaged with their company pension. Such figures highlight the problem advisers face when getting people to attend regular reviews to discuss retirement plans. Certainly, for savers that are years away from retirement and feel advisory meetings are unnecessary, a simpler tech-based approach through online apps, booking systems, and instant chat services could be the answer.
These platforms will play a major role in engagement due to their ease of accessibility. They allow advisers to communicate with clients through email to provide updates on the progress of their retirement goal, in addition to sharing topics of interest such as investment opportunities. Positively, as more people seek advice motivated by handy virtual meetings and platforms, the overall cost of advice will become reduced, thereby increasing accessibility.
Independent financial advice will always be superior to robo-advice when it comes to developing tailored and effective retirement strategies. However, there are still gaps among the public of those that want financial advice but find it inaccessible. And while the advent of virtual services has improved this, further developing tech-based solutions alongside financial advice will propel accessibility and help people achieve the retirement outcomes they deserve.
