As the population benefits from living longer, the financial services sector needs to think about how it will adapt to meet their needs. As a population group that is going to need help and advice this should be the natural domain of the intermediary. Whilst we have seen some firms and brokers specialise in the Equity Release market, the regulatory dial over the two decades has driven firms to become more specialist and made the holistic adviser a practical impossibility.
Pension saving and decumulation is also now the most complex it has ever been. However the FCA has now published its Occasional Paper on the Ageing Population which asks lenders and brokers to think seriously about how they can improve the ways they service this market.
A good starting point is to consider where the market starts. Some consider that any advice post 55 should involve taking a wider perspective across all aspects of finances rather than a particular silo. More thinking is now moving to it being any advice that takes the recommendation or product to or past the anticipated date of retirement. One of the key changes coming next year is the proposed changes to what constitutes advice or guidance.
Helping consumers understand the issues they face and some of the answers can clearly sit in the space of guidance, with advice only coming at the point of a specific product recommendation. Getting compliance functions to support this is a challenge. However we need to get better at signposting to consumers their real needs, practical solutions and sending them to those who can give practical and tangible help.
AMI is currently working with IMLA on one of their projects to look at how we can better serve this market and its consumers more widely. Whilst the soon to depart Money Advice Service has some good information on its website, this is one of the very few places that those looking for help on later life financial planning can see quality output. This needs changing. We need the web to provide better information to those looking for help.
Firms need to think more deeply about the various life events that cause people to need advice and assistance. They should be thinking about how they persuade consumers to engage and enter dialogue. Many will be asset rich and income poor and how the industry introduces better products and advice is critical. All firms need to look at their proposition through the lens of the older consumer to see if their offerings are relevant. The traditional approach will not work.
For advisers who should be worried about the impact of technology and automation on the prime residential mortgage market, the move towards looking after the later life sector should be a natural choice. Whether that is working through the Openwork type model of upskilling mortgage advisers to do more on pensions and investments; a collaborative approach where advisers from different firms work together to provide a full service offering; or firms go back to employing across the advice spectrum and provide a one-stop shop using various team members to satisfy needs, there are a range of models all of which could work.
What is clear is that with the advent of tech, an ageing population and a regulator which expects more from the industry, staying the same will not be acceptable. We will need to evolve and develop in a way which meets the needs of the older group in a better way. A rejection from one firm should never be seen as the end of the road and our industry needs to get better at passing the customer to those who can help, rather than seeing them as a lost opportunity.
Experienced and knowledgeable advisers who have probing skills and can engender trust are critical for this market. Consumers want to talk and research alternatives supported by their family members. Indeed the accessing of the Bank of Mum, Dad and Grandparents should be the start of conversations that improve value and return for all parties. Sensible conversations will not be run by a “bot” but by people who turn words into wisdom.