Expert: Richard Parkin, Head of Retirement, BNY Mellon Facilitator: Kathy Ellison, Director, Savanta
Headlines:
- Is there an advice gap or engagement gap? There were differing views on whether an advice gap exists. Some felt there is not a lack of advice availability but rather people not seeking it out. Others felt there is a gap in affordable advice for smaller pots
- Who is responsible for addressing advice gaps? Responsibility falls on government, employers, schools, parents, providers, and advisers. Education, regulation simplification, technology innovation and industry collaboration were all discussed
- Constraints and opportunities for advisers. Advisers noted capacity constraints on taking on many more clients and that clients with lower value investment or smaller pots would not be able to pay the fees to make them sustainable as clients. Some advisers are innovating with employer arrangements and digital tools, in addition to firms like Pension Bee offering popular direct solutions to consumers approaching retirement
- Robo-advice was a feasible option at the accumulation phase, but more dangerous at the decumulation phase
Discussion points:
The participants discussed whether there is an 'advice gap' in the UK retirement market. There were differing views on whether a gap exists, with some feeling there is not a lack of availability of advice but rather an 'engagement gap' where people are not seeking advice. Others felt there is a gap in affordable advice for smaller pension pots.
The discussion covered who is responsible for addressing any advice gaps, including the government, employers, schools, parents, providers, and advisers themselves. Key factors discussed were education starting early, simplifying pension regulations and products, using technology like robo-advice to increase capacity and lower costs, and firms working together across the industry.
Advisers noted capacity constraints on taking on many more clients and that clients with lower value investment or smaller pots would not be able to pay the fees to make them sustainable as clients.
Some advisers are innovating with employer arrangements and digital tools, in addition to firms like Pension Bee offering popular direct solutions to consumers approaching retirement. It was noted that robo-advice was a feasible option at the accumulation phase, but more dangerous at the decumulation phase.
Overall, the discussion recognised advice plays an important role but requires an ecosystem of support from government, employers, and education.
Key takeaways:
- Government should consider regulating to simplify pension rules and products
- Employers should explore opportunities for workplace financial education and advice
- Advisers should increase the use of technology and digital tools to expand capacity
- Financial services industry needs to collaborate on education initiatives
