Pension Dashboard  

Industry clashes over advice cost after dashboard

Industry clashes over advice cost after dashboard

Scottish Widows has joined the chorus of firms predicting the pension dashboard will reduce the cost of advice, while others questioned the idea.

Peter Glancy, head of policy, pensions and investments at Scottish Widows, said there were cost cutting opportunities in the fact finding process of financial advice, which was expensive and currently paid for by the client.

He said: "To gather information from providers like insurers, the service standards can be almost instantaneous, but from an old occupational scheme it can take several months.

"On the more exotic self-invested personal pensions (Sipps) it could take a long time to get a valuation of some of those assets.

"If that information is available on a pension dashboard, you're automatically reducing all that research time, and you're actually only paying for the advice element."

Mr Glancy was not the first to suggest these savings were possible. 

National advice firm LEBC calculated giving financial advisers access to the pension dashboard would cut the cost of advice by up to £400.

The pension dashboard project will allow savers to see all of their retirement pots in one place at the same time, giving them greater awareness of their assets and how to plan for their retirement.

The first one, a non-commercial service hosted by the Single Financial Guidance Body (SGFB), is expected to be launched this year.

Guy Opperman, minister for pensions and financial inclusion, said further details on the project would be revealed in the department for Work & Pensions' (DWP) response to its dashboard feasibility study consultation, which he expects to be published in mid-March.

However, not all agree about the impact of the project on the advice costs in the short term.

While Nathan Long, senior analyst at Hargreaves Lansdown, agreed there might be cost cutting opportunities in the long-term, he said this would not happen without the dashboards being able to "scoop up a rich stream of information from pension providers".

He said: "Without details of charges, guarantees, tax free cash entitlement, exit penalties, maturity dates, current fund choices and available investments we’re unlikely to see a huge change for advisers."

Paul Stocks, financial services director at Dobson & Hodge, agreed that first of all the information provided about pensions had to be reliable and relevant.

He said: "A ‘real time’ record of state pension entitlement and the current value of defined benefit pensions would be a huge benefit for us and our clients.

If the DB details were non-existent on the dashboard or the deferred value or estimated future value were given rather than current value then we’d be much less enthusiastic.

"For DC, if the client is seeking advice on the appropriateness of their plans, then we would want full policy details before giving any advice – specifically whether there are guaranteed annuity rates, the nature of the underlying investments, ongoing charges, TFC levels etc and I’d be surprised if this were contained on the dashboard.