EV: Workplace Engagement Key to Improving Outcomes in Retirement
Jun 8, 2023 9:52:06 AM
Workplace engagement is crucial to improving financial outcomes for consumers, particularly around saving for and taking an income in retirement. This was a key message from industry participants in a recent EV roundtable following the launch of a new white paper from the financial software provider highlighting the importance of fully integrating hybrid and digital advice into advice propositions to close the advice gap and deliver better consumer outcomes.
The consensus among the roundtable participants, which included representatives from Isio, LV=, Origin Financial Services, Ammonite, Goldman Sachs, and St. James’s Place, was that earlier engagement with investment and pension saving, particularly through the workplace, will better prepare people for the financial decisions they will face at different life stages. Engaging people in the workplace through guidance tools was seen as a ‘stepping-stone’ to simplified advice, helping to broaden consumer access to advice while at the same time allowing providers to serve more clients effectively.
“In the relatively new world of pension freedoms and the rapid growth of defined contribution pension assets, the number of consumers requiring advice before, at and in retirement is likely to remain huge. Traditional advice services are currently out of reach for many people, while guidance often doesn’t go far enough. These days retirement income isn’t just about pensions. Many people have other assets to consider, but while pulling these together into a coherent financial plan is easy with the help of a qualified financial adviser, it’s much harder if you’re trying to do it on your own.
“Pension and employee benefits providers have the opportunity to step into this advice gap, engaging with consumers in the workplace via guidance tools that use the customer’s own data to explore scenarios and potential outcomes. By integrating these guidance tools with digital and hybrid advice solutions and delivering a consistent approach across all channels, providers can offer a stepping-stone into simplified advice or traditional advice services depending on the individual’s needs or preferences.”
EV’s whitepaper, Hybrid and Digital Advice: Driving Transformational Change, at Last, argues that by embracing digital and hybrid advice solutions, financial services firms can drive business success while improving access to financial planning for the millions of people who currently can’t or won’t take traditional advice1. This is especially true when planning for retirement and encouraging people to put more money aside for their future to achieve better outcomes in later life. While auto-enrolment has successfully driven up the workplace pension participation rate, the DWP estimates that 38% of the working-age population still isn’t saving enough for an adequate retirement income2.
“If you think about the average pension journey today, most people are auto-enrolled into a workplace scheme and put into the default investment strategy. They take the path of least resistance through the whole accumulation phase and often don't realise until they get to 50 to 60 that there are decisions to make, and then people are really scared of making those decisions, so they often put them off. But retirement is changing, it’s not a cliff edge anymore. Workplace engagement is key to opening up the discussion around people’s working options post 50, which feeds into the need to take advice around supporting their desired lifestyle through the different phases of retirement.”