Corporate wrapmay not have changed workplace savings habits just yet, but then Rome wasn’t built in a day says Andrew Taylor, senior proposition development manager, Scottish Widows
This was the subject of a blog I read towards the end of last year, referring to the famous line from The Life of Brian – “All right, but apart from the sanitation, medicine, education, wine, public order, irrigation, roads, the fresh water system and public health what have the Romans done for us?”
The author of the blog summed up the answer to the question as ’nothing’. Maybe he is right, as corporate wraps haven’t cured the savings gap or suddenly attracted millions of new funds under management.
This is probably down to our industry applying the title of “wrap” to many of these propositions that don’t reflect what they are all about, and so the naming debate remains for another article.
These new corporate platforms, as I will call them, may not have cracked the packaging of Isas and pensions and may not have presented us with the immediate visible numbers of product sales, but they are playing their part in helping change things.
Our pension system is complicated and is immediately seen by consumers as such. They don’t understand value or trust pensions and have little desire to do so. Our own research shows that many employees don’t know how much they or their employers are paying into pensions and so have little or no chance of valuing them.
Many of the new corporate platforms are not simply about packaging and selling products to the employee but providing them with access to financial education and guidance. The aim of this is to engage the employee in their financial planning decisions and help them understand the value of the benefits their employer provides them. It should also provide them with the tools that will help them work out for themselves the benefits of paying into a pension scheme.
“Our pension system is complicated and is immediately seen by consumers as such. They don’t understand value or trust pensions and have little desire to do so”
If this is all positioned alongside their other personal finance and legacy products it will help make the pension a little more relevant and their overall retirement position clearer. The platforms that do this well do so by taking this more integrated approach, recognising that none of this long-term planning can be done in isolation of employees’ short and medium term financial planning needs.
It’s probably too early in the lifecycle of corporate platforms to clearly demonstrate that this is changing our world but from our own early experience I can say this much. Interactive tools are the most popular part of the site with the pension planner tool proving to be the most popular by some way.
This theme is followed through in the guides and guidance topics where saving for retirement and approaching retirement are again the most popular subjects. The pension planner tool is a great example of how technology can be used to present the outputs of a pension calculation in a more visually engaging format that a consumer can understand.
When it comes to the actual product pages, pensions still remain top but with the other savings products such as Isas much closer behind. This could suggest that employees are more comfortable with these more simple types of products and are skipping straight to the product detail.
The aggregated view of the user’s financial products, assets and budget is the second most popular section. Encouragingly users are adding other product values without being prompted, demonstrating a desire to pull all these values together in one central place.
This facility will become more valuable as the user approaches retirement and can use this single source of data on their pension plans to provide a clearer picture of their financial position at retirement. This could be a key area where the financial education and guidance available on these platforms can engage with the employee and prompt them to consider their options as they retire.
So, apart from providing employees with the information they want on pensions, the ability to aggregate their various funds and have a clearer view of their retirement provision and the tools to enable the user to work out the benefit of paying into their pension, what have corporate wraps done for us?
Rome wasn’t built in a day and corporate platforms will develop and continue to improve as adviser and customer research dictates. What we have learnt in a very short space of time is that financial education and guidance in the workplace is a fundamental element in ensuring the success of any corporate platform.