- Prompts: flagging poor diversification of investments; poor fund performance; and cash holding held for a lengthy time.
- Filtering: triage service that sets out pros and cons of retirement options; tools to help choose the right tax wrapper for the individual.
- Action: encouraging consumers to save more towards their pension, or opt back into their workplace pension if they have opted out; alerting consumers to consider replacing their out-dated, high-cost fund.
Personalisation is key to engagement. We can see this by analysing the success of tech giants who spend vast amounts of time and money honing in on individuals to create highly personalised and streamlined products and services.
Our industry is competing for consumer bandwidth with the industries that are years ahead in their use of data. We too, in financial services, need to take into account our customers’ personal characteristics to become more relevant.
There are a number of innovative initiatives underway that will help the financial services industry harness consumer data. The government’s pensions dashboard initiative will allow consumers to see all their various pension pots in one place.
Similarly, Tisa’s open savings, investments & pensions initiative will allow consumers to see all their liquid assets in one place.
If personalised guidance is left constrained by regulations and the industry cannot build support services on the back of consumer data, we are concerned that consumers will not be able to harness the benefits that these innovative initiatives hold.
As for simplified advice, businesses question how they can provide this service at a lower cost. Providing greater regulatory clarity on the ability for businesses to limit their required fact find is one way to reduce the cost of the service, especially if technology can be harnessed and companies can place more reliance on consumers inputting data.
But time is of the essence. The FCA will shortly determine their priorities coming out of their recent call for input on the consumer investments market.
We cannot expect the regulator (and Treasury) to commit to redesigning advice rules without the business case from industry. This is the time for proposition and compliance teams to come together in businesses to design the support initiatives of the future and what regulatory changes are required.
The thinking that is done over the next few months, and the decisions that get made on the back of that thinking, is going to shape this industry for years to come.
Tisa has had a long-standing mission to unlock the provision of better quality, more personalised financial guidance to consumers. We are the most optimistic we have ever been, since the implementation of the RDR, about regulator and industry working together for the public good of the UK consumer base.
We are working closely with insurers, platforms, pension providers, banks and building societies to help inform a future definition for advice.
If we do not take advantage of the next few months, we might be waiting half a decade or more for the next opportunity.
Prakash Chandramohan is strategic policy director of Tisa