Scottish Widows is first to be able to demo a working corporate wrap, and employees will like it, says Ian McKenna, director of the Financial Technology Research Centre
The role of worksite marketing in the future of financial product distribution has been the subject of much speculation over the last couple of years. A number of life offices have announced plans in this area, but a couple of weeks ago Scottish Widows became the first such organisation to demonstrate to me a live “Next Generation” service.
While the FSA’s plans for RDR include some very admirable intentions, the result will be to make traditional advice unaffordable for all but a very wealthy minority. If one looks calmly and dispassionately at the regulator’s new rules, the FSA will, over time, kill off advice as we have known it for the last 50 years.
It is often said that workplace marketing has never taken off in the UK. I believe it is more accurate to say it has never taken off in the life and pensions arena. For years Frizzells, now part of LV=, has been highly effective at marketing a range of general insurance products to public sector workers and trade union members.
Several companies are well-advanced in building their new systems and a number have booked slots to show me their propositions over the coming months. The prize for being first however goes to Scottish Widows.
Their service, known as My Money Works, is designed to provide a natural trusted place for employees to go for financial information. The emphasis is on providing information, not selling financial product. Upon entering the service the user is presented with a simple aggregation tool designed to be based on the client’s existing financial position. By entering data for their existing financial relationships including money purchase and final salary pensions, life cover, property, savings and investments the user can build a picture of their finances. Users do not even have to already be members of a Scottish Widows pension scheme. Although the service is being built to be offered to employers who use Scottish Widows as their corporate pensions provider, it is introduced to employees as a standalone service available even if they do not decide to take advantage of the pension.
If one looks calmly and dispassionately at the regulator’s new rules, the FSA will, over time, kill off advice as we have known it for the last 50 years
Users can populate the service with varying degrees of information as they build up their personal profile. I also particularly liked the Reality Check, a wizard to help customers understand their priorities. A fourteen section questionnaire comes up with high/ medium/low priorities based on information provided. Each of these then provides generic information in plain English, drilling into increasing levels of detail to increase customer education. Currently they offer simple calculators like building a lump sum. There is also an excellent personal budget calculator which captures the user’s income and expenditure. Having used many such services over the years I found this one compelling.
What I am really drawn to in this service is the simplicity of the presentation. It is very much a service designed for use by people who have a limited understanding of financial matters yet it is concise enough that more sophisticated savers would, I expect, still find the presentation entirely acceptable. It is great to see a company build a service that is not about selling financial services; it is about informing consumers and helping them take control of their money.
Clearly this is very much a phase one delivery. Scottish Widows has concentrated on getting some clear concise content in place that can be a real help to consumers. It is easy to see so many ways in which they can build on the service. So often in the past I have seen organisations put together services with bold statements about helping consumer education which, when you actually get your hands on them, end up being a less than subtle set of sales tools littered with financial services jargon which end up patronising the user. This is far from the case here.
Having been first to market and having made an excellent start delivering a truly consumer friendly service, Scottish Widows have thrown down the gauntlet to every other provider that follows to match their offering both in terms of ease of use and consumer education. They must also make sure they stick to their original principles with further releases. If they can do this the company will be well placed to benefit from the explosion in worksite distribution which must be an inevitable consequence of the reduction in IFA market share post RDR.
Equally services like this can help those IFAs who survive by delivering a level of support that advisers could not fund themselves and allows them to concentrate on high value advice where appropriate.