Proposition teams all over the industry faced cancellation of all leave as George Osborne ripped up the pensions rulebook in his Budget a couple of months ago. Since then there has been a quite remarkable amount of crystal-ball gazing about how everything will play out.
The truth is that our industry’s search for firm facts and certainty won’t ever find either. That’s the thing about individuals coming up to retirement – they have massively different needs. For example, we tend to assume that income needs in retirement are constant over time. I suspect for many people that is far from true – there may be the obligatory cruise, new car or set of golf clubs before things settle down. And that assumes, of course, that retirement is fixed at a point in time, which we all know is seldom the case these days.
So in terms of designing products and propositions that can fit these needs, how can we do something coherent as platform providers? We’re not in a position to create highly manufactured new investment propositions which aim to fulfil an individual need – that’s what discretionary managers do, and there’s a reason it comes at a cost.
But what we can do is act as a venue where people approaching retirement (and of course the advisers that serve them) can tidy up a lifetime’s worth of accumulated savings. That doesn’t sound glamorous, but it is the first step in giving them clear line of sight of their wealth (or otherwise) so that they can engage in your planning process with confidence.
Pensions are obviously a big part of this, but over time, with ISA limits up and greater flexibility between cash and stocks & shares ISAs, it wouldn’t surprise us to see the process of – and this remains a horrible word – decumulation happening in a much more holistic way.
We think we’ll get to a situation very soon where pension products dealing in mainstream investments – which is pretty much every on-platform pension including Aviva’s – will offer total or close to total flexibility at either a zero or very low cost. The flexibility which seemed so exotic not so very long ago will get commoditised so that it becomes a minimum feature without which you as advisers would simply not consider the provider.
From there, it seems to me as someone charged with delivering propositions for advisers to use on-platform, that the ability to look across a client’s affairs and build decumulation (sorry) strategies which span monies in all tax wrappers as well as unwrapped monies, will be the key advantage of platforms. It’s why I think not only having a platform, but also an ability to look across to back-book insured business as well (as you can do on Aviva Platform; sorry for the plug) will be completely central.
Funnily enough, it may be the case that functionality, clever modelling and tools won’t be the way forward here. Too much of what’s required is too individual, and any modelling, even based on a well-structured cashflow forecast, will only ever be a jumping-off point. I have a feeling that offering a really efficient way of migrating highly fragmented assets for each individual together to give that line of sight, and then offering really good reporting facilities as well as total flexibility, all at a good price, will be the way forward. This is true, I suspect, for every platform and I make the point in that spirit rather than talking Aviva’s book.