The FCA can see the way the wind is blowing now the regulator, combined with HM Treasury, has created the perfect storm: RDR - which stimulated a reduction in the number of regulated advisers able to profitably serve the mass market, and pension freedoms which made the accumulation-to -decumulation decision-making process considerably more complex (ironically requiring even more regulated advice to navigate it to best advantage).
Retirement Outcomes Review
As such, the Retirement Outcomes Review is right to focus hard on the non-advised consumer journey and steering providers towards easing that journey into sound decumulation decision-making.
In summary and to get the crystal ball out for a minute, it seems inevitable that providers will be forced to re-engineer paper-based, and increasingly digital, consumer journeys which help decumulating customers make better informed decisions associated with tapping their retirement savings in a mix of ways from full encashment through UFPLS withdrawal, income drawdown, annuity, or new Guaranteed Annuities. The emphasis on barriers to entry in the FCA studies underlines that they are keen to see plenty of innovation in the retirement income space.
Comparison engines aplenty will need to be built into business processes and the decumulation market watch-phrase will need to be ‘simplicity in the face of complexity’. A successful Pensions Dashboard should help create greater transparency and consumer engagement but will require legislation to achieve universal coverage. All this will be a challenge for the industry which I am sure it is equal to as technology platforms and tools mature and new fintech innovations rush to meet market requirements.
Adrian Boulding is director of retirement strategy of Dunstan Thomas