Providers have expressed interest in offering enhanced guidance services to help tailor information to their clients and specific situations.
Appearing at a Work and Pensions committee hearing on accessing pension savings this morning (July 21), Rachel Vahey, senior technical consultant at AJ Bell, told MPs the firm wants to be able to provide enhanced guidance to make its information more relevant for the customer and entice them to act.
Vahey said: “At the moment, what we have to do if we are providing information to customers is to provide the whole kit and caboodle.
“We have to provide all the information, which relates to that particular topic in a very balanced way, but we have to provide everything regardless of the customer.
“There are many different types of people, and with many different needs and with many different circumstances. And what we are looking here to do is not to provide advice, we're looking to provide enhanced guidance where we can really make it more relatable to the customer and their specific situation."
She added: “At the moment they receive a whole enormous amount of information, but it's difficult sometimes to actually decipher between what is relevant to them and what is not.”
Matthew Arends, head of UK retirement policy at Aon, agreed with the idea but said the clear distinction in law between advice and guidance meant providers did not want to blur the boundaries.
On the other hand, individual's needs were diverse and their levels of pre-existing understanding different and so individuals needed support in various ways, he added.
He said one way of achieving this could be to offer technology based solutions to assist with advice which could also bring down costs.
Arends said: “For some individuals digital advice, you might call it, could be a very helpful way of providing advice at a lower cost.
“This committee could recommend that the work and pensions department should consider this as a service that the Money and Pensions Service may provide.”
Meanwhile, Stephen Lowe, group communications director at Just Group, challenged providers to offer advice themselves to help their clients.
Just Group has its own advice arm called Hub Financial Solutions, which has recently launched an automated service which provides regulated financial advice to retirees seeking to make the most of their pension savings.
Lowe said: “If you want to provide advice to your customers, you just need to put your money where your mouth is. You need to put the capital aside, take the liability, and give them the advice.”
But he admitted there was a place for enhanced guidance.
Lowe said: “When we have a customer in front of us, we might want to say things to them like, ‘don't take all of your money out immediately because you might pay more tax than you have to’.