As people live longer, the importance of putting robust retirement plans in place becomes ever more important.
The continued success of auto-enrolment has been complemented by the increased flexibility in the retirement income market that was announced in the Budget. There are more options than ever before and retirees will need access to good quality advice if they are to make informed decisions about their future.
The importance of putting a plan in place is at the centre of Scottish Widows’ recent campaign, which saw the return of the Scottish Widow to British TV after a six-year absence.
In addition to highlighting the importance of planning ahead, the campaign also signals increased emphasis on supporting advisers in offering the best quality advice, according to Scottish Widows’ director of annuities and protection Richard Jones.
“We know the people of Britain are not doing enough to prepare for their financial futures and we know that we can help,” he says. “The critical message we’re giving to consumers is that life feels better when you have a plan.
“Lots of customers will need help in creating that plan, and that is where the intermediary market can really play a pivotal role. And by serving more customers, the IFA market helps society to be better prepared for the future.”
Scottish Widows’ director of pensions and investments Ronnie Taylor agrees, saying the campaign highlights a more modern approach to helping the advisory community: “The campaign builds on the rich heritage that Scottish Widows has developed over a number of years, but also adds a more contemporary spin to how we can help advisers moving forward. This means more modern solutions, more use of digital and more use of social media, so it combines the past and the future in a fantastic way.”
Over the past twelve months, Scottish Widows has built considerable expertise in key retirement areas such as auto-enrolment. During that same period, Scottish Widows has helped 300 employers to stage, with a further 3,000 expected to stage over the coming year.
“We’ve seen a ten-fold increase in business this year,” says Taylor. “The big thing we have learned through that process is the importance of investing time to help employers and advisers to tee up the scheme in the right format to begin with.
“One of the key things we are doing to help that process is the establishment of a team of business development managers across the UK, the development of the AssistMe digital platform, and also our telephony support team for advisers and employers.
“We feel giving this level of support at an absolutely critical time for auto-enrolment makes a massive difference – we are certainly not underestimating the amount of work that is involved in helping advisers and employers through this process.”
The experience of helping so many employers through the auto-enrolment process means valuable lessons have been learned.
“You need to start as early as you can and invest time in really thinking through the strategy for your overall corporate pensions offering, with auto-enrolment as a subset of that,” says Taylor.
“Then allied to that, it is all about data. It’s about understanding the current quality of data that the employer has about their employees and how you can use that to manage a way through the auto-enrolment process. It is about starting early, having a clear strategy and getting on top of your data as soon as possible.”
As auto-enrolment progresses through to smaller employers, there is increased opportunity for advisers to step into the gap filled by the big employee benefits consultancies.
“It is a great way for an adviser to add value to the employer relationships. There is a range of different ways they can get involved and a range of relationships they can have with providers such as us,” says Taylor.
“Particularly, the initial set-up and consultancy and working with the employer to make sure the scheme is set up on the right basis and that they are going to be able to manage auto-enrolment in a way that is right for them. I think there is a great opportunity for advisers to add value.”
He continues: “What we have found is there are three key ways that we can help advisers and employers through the process. First of all, it is face-to-face support through business development experts.
“Secondly, it is digital delivery through our AssistMe platform. And thirdly, it is telephony support for advisers and employers to help them particularly through the early stages of establishing an auto-enrolment scheme.”
Retirement income market
In addition to auto-enrolment, Scottish Widows has also focused on the retirement income market with the launch of its enhanced annuity last year.
This product sits alongside the firm’s annuity and drawdown offerings. With the recent changes announced by the Chancellor of the Exchequer, the retirement income market is set to go through profound change in a very short period of time.
“Our purpose is to be the retirement provider of choice in the UK. That is what we are all about – and so being a prominent annuities and drawdown provider is core to that,” says Jones.
“Annuities are, and we believe will continue to be, a really important part of somebody’s retirement planning. Drawdown offering will play a more important role, but the changes mean that support and advice becomes even more pivotal to customers.
“Their options and choices have exploded – we need collectively to help them through that. We’ve got the right assets to do this. We have good long-term relationships with intermediaries; we’ve got a good brand that people really resonate with; and we are a big, strong well-capitalised organisation.
“More choice for customers means more complexity, so we’ve got to be careful that we don’t put too much complexity in front of customers. Again, this is where advisers can have a far more prominent role in the future to help customers make sure they are making the right choices.”
This increased choice in the retirement market comes at a point in time where fewer people are able to access regulated financial advice as a result of the Retail Distribution Review. So what of those who are unable to access regulated financial advice?
“A lot of consumers coming into retirement are really unsure of their options and the decisions they have to take and we all have a role to play there,” says Jones.
“Advisory firms and distributors can do more to educate, but so can providers. We can give a lot more information, content and guidance, and use technology to help us do that. We also have to partner with the likes of the Money Advice Service and Financial Conduct Authority to make sure we are raising education levels.
“I hope that from all of that, more customers go and seek advice because that is the most important way to get the right retirement solution for you.”