Advice firms and pension providers need to improve their digital communications, not only with existing clients but also with younger potential clients, studies show.
Research recently carried out by FTRC with Opinium for Dynamic Planner looked at how consumers were currently receiving information from their financial adviser and how they would prefer to receive that information in the future.
The challenge for firms is how they engage with young consumers. They can do it digitally
One of the notable findings of the research was that 34% of 18– to 34-year-olds were currently receiving information from their adviser by mobile, but 40% would like to receive information this way in the future.
High earners
Although the research found that people of all ages valued face-to-face advice, many were also crying out for the ability to track pensions and investments — and to access personalised content — through mobile phone apps.
Demand for this was highest among 18– to 34-year-olds and the highest earners (people earning more than £100,001), at 80% and 82% respectively.
According to FTRC founder Ian McKenna, advice firms that do not focus on building a pipeline of younger clients are “quietly dying”. In his view, successful businesses must be able to support younger people in a streamlined and cost-effective way right now, to ensure they stay on board when they earn more money.
We see a good level of digital adoption in the first phase of decumulation, when people have just retired
“Today’s young consumers are the high earners of the future and if you don’t pick them up now you won’t get them in the future,” he says.
“The challenge for firms is how they engage with young consumers. They can do it digitally.”
The fact the highest earners in the survey want to engage with their personal finances through mobile-phone apps shows advice firms this is not something they can dismiss as appealing only to younger clients, who have not yet built enough wealth to be commercially viable.
Lack of investment
Trafalgar House’s latest Trust & Confidence Index, which was published earlier this year, explores similar themes.
It focused specifically on the pensions market, with almost half of respondents saying they were happy to retire online to some degree. There was little variation between age groups; the number of young people who were comfortable with technology but not actively engaging with pensions was similar to the number of older people who were not keen on retiring online.
The most common reason for respondents preferring to not make retirement decisions and execute them online was the desire to talk things through with someone.
We shouldn’t assume pensioners are not digitally sophisticated
According to Trafalgar House, however, what is deterring more people from digital adoption in the pensions market is the industry’s lack of investment in technology to support more complex processes.
“The technology focuses on [pension scheme] members/savers, but little is being done to loop in the adviser,” says Trafalgar House client director Daniel Taylor.
“This is not about the penetration of the technology. It’s about the processes and how they work, especially at pre-retirement.”
Alleviating challenges
According to Taylor, the pension industry is struggling to cope with limited resources and not enough talent coming through.
“Technology can alleviate those industry challenges to offer better levels of engagement,” he says.
“It can help the industry to do it in a cost-effective, faster and secure way.”
It is often assumed that older people are not as digitally engaged as younger generations, but Taylor says this is not always the case.
The technology focuses on [pension scheme] members/savers, but little is being done to loop in the adviser
When someone retires, they have the time to spend logging in and using digital channels. They have already made the big decisions about their retirement savings — going into drawdown, for example — so communications are likely to relay simpler information and decisions.
“We see a good level of digital adoption in the first phase of decumulation, when people have just retired,” says Taylor.
“We shouldn’t assume pensioners are not digitally sophisticated.”
This article featured in the November 2024 edition of Money Marketing.
If you would like to subscribe to the monthly magazine, please click here.
Comments