UK providers’ technology propositions are falling behind those of their overseas competitors warns Ian McKenna, director of F&TRC
Since the beginning of the year I have been looking increasingly at the range of personal financial management tools that are not just prevalent but free to consumers elsewhere in the world. One of my key conclusions from this research is that whilst the UK personal finance industry has been distracted by local issues such as RDR and auto enrolment, the rest of the world has seen vast advances in the level and quality of personal financial management tools being delivered to consumers.
I am increasingly concerned that as a result of these distractions the UK financial services community’s propositions, both in product manufacturer (life offices and platforms) and advice, are increasingly falling a long way short by comparison with the services being provided to consumers elsewhere in the world. If not addressed quickly this will lead to a situation where new providers and advisers from abroad will enter the UK market and take a large share of both existing business being reviewed and those new opportunities that emerge from auto enrolment.
Elsewhere in the world consumers are able to see all the values of their bank accounts, credit cards and a wide range of other information in a single service whenever they want over a range of digital devices as part of wider planning services.
Such solutions give them the opportunity to take far closer control over their money. For example it is not unusual for such services to show the consumer not just the current balance on their accounts but also details of all other fixed transactions between the current date and their next pay day. Some services also provide the user with an indication of their typical discretionary spend between that date and the next pay-day. Others allow users to set personal budgets against individual activities if they want to control their spending in specific areas.
By now I imagine some readers are asking what all this has to do with long term savings and advice. My point is this, as an industry we consistently fail to communicate effectively in terms our customers can understand. We provide consumers with wordy complicated documents with lots of big numbers on them, which mean nothing in real terms and then wonder why the public are not confident about their long term savings. If we want our customers to start paying attention to what we are saying we need to start talking to them about the day to day issues that concern them.
What is of more interest to the average consumer; understanding how much money they will have in 25 years, or knowing what they will have left in the bank at the end of the month? If we start talking to consumers about issues that they are interested in we have a much better chance of then engaging with them on longer term matters.
A handful of organisations are going in the right direction. True Potential, although not traditionally thought of as a software supplier in the corporate pensions market, is now deploying its financial planning apps that include data feeds not just from insurers but also a wide range of other banking and financial organisations. Its new service is due to start rolling out to their adviser firms during September. At this point employers who have placed their group pensions via a firm who use True Potential as a software supplier will have access to a level of information, over the internet, via iPads and a range of mobile phones that very few specialist advisers can get anywhere near.
True Potential are not completely alone in this area. Although I have not had a chance to see it yet I understand that Alexander Forbes are now offering a proposition that mixes Staffcare’s outstanding auto enrolment software with a member facing service powered by Sammedia. This sounds like a very powerful combination which I hope to be able to report on in the near future.
Over the next month I am visiting three events around the world to look at what leading edge employee benefits and financial advice technology is looking like. I will be highlighting the best of the best in next month’s column. But even before these visits I know that the vast majority of UK employee benefits advisers and pension providers are falling far behind the standards being set elsewhere in the world. There is limited time for organisations to act if they do not want to see their market share fall dramatically in the next couple of years. Now is the time for firms to identify how they can deliver a richer experience to their clients before someone else does.