Pensions and beyond: the power of financial confidence

To deliver a better financial future for all, leaders in the pensions and savings industry – and employers – must adopt a more forward-thinking and positive approach that embraces technology and education
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The UK pensions industry is steeped in tradition, but it’s also constantly learning from other industries that are already ahead of the game. It must now harness new innovations and modernise to meet people’s needs as priorities and preferences change. Understanding what will ignite interest across the different generations is critical here. The future for savers and pension scheme members looks even brighter if they can pursue their financial journey with confidence. 

That is why industry leaders must adopt a positive and forward-thinking approach, harness the power of technology and put better member outcomes at the top of their agenda. This will enable them to steer a clear path to a more efficient and effective pension system that works for everyone.

It is a vision shared by consultancy Isio, one of the largest pensions advisory businesses in the UK, which has been challenging current thinking on pensions, benefits and investment advice since it launched in 2020, with a relentless focus on innovation and improvement in this market.

“Our aim is always to challenge the status quo,” says Andrew Coles, CEO of Isio. “That means we can’t accept that what has worked in the past will always work in the future, so we’re continually striving for improvement.” 

Engagement and building confidence 

Everyone generally agrees that financial education should begin in schools, in the early years, but the workplace has a massive role to play too in building financial confidence. Employers have a strong trust and information advantage over others when it comes to building and supporting their employees to get the most from their finances – and not just when they reach retirement. 

Our aim is always to challenge the status quo. That means we can’t accept that what has worked in the past will always work in the future

“The ultimate aim is to create more confidence in the savings environment and help people to understand the importance of saving for the future and prioritising in the right way,” says Coles. Given the current cost-of-living crisis, it is critical that people learn to manage their finances. That means understanding what people’s short-, medium- and long-term needs and goals are, and giving them the right set of tools whether they’re an expert or a complete novice. 

All of this must be brought together to form an overall financial strategy that focuses on savings as well as pensions. Knowledge empowers individuals to make better-informed decisions about their finances, but it’s the tools and hands-on support that help individuals to build this knowledge, to allow them to make better-informed decisions. This philosophy is embedded in Isio, which works with the charity MyBnk to help improve young people’s financial education, as well as a financial coaching team providing guidance and support to employees. 

The crucial role of technology 

The biggest enabler of financial confidence and health is technology. Investing in technological infrastructure and solutions gives firms much greater efficiency in terms of their data manipulation and transfer abilities, alleviates the pressure on their administration team, reduces their risk and enables greater auditability. For employers, it allows them to gain deeper, real-time insights into their workforce. 

A money health check tool that Isio offers does just that. Recognising that tackling finances is a daunting task, a five-minute journey allows individuals to start on that path, allowing them to see the key areas that they should address. This in turn provides valuable data that employers can use as a key component of their financial wellbeing strategy. 

“From a member’s standpoint, they will receive a real-time service and be able to carry out everything they want to do online, as well as having a far broader view of their finances,” says Vito Faircloth, chief digital officer at Isio. “The hardest part is starting, so a frictionless experience with clear actions can help them to see the value of getting their finances in order, particularly at this difficult time. A great example where we have done this has been with a large public-sector body, supporting them with staff retention. That combination of a frictionless technological experience and personable, emotive support delivered by our coaches is delivering great outcomes for our clients.” 

A frictionless experience with clear actions can help members to see the value of getting their finances in order

Faircloth also points out the exciting opportunities for innovation around data sharing. “It went from open banking to open finance, didn’t it?” he says. “Now, we’ve got some bold views as to how it’s moving more towards open data. Pensions and finance shouldn’t be looked at in isolation, because there’s a direct link between someone’s financial wellbeing, their emotional and mental wellbeing, and even their physical wellbeing. It all needs to be looked at as one overall wellbeing plan for members. So, having upgraded, innovative systems allows the employee to start to amalgamate that data and get to the outcome of taking tangible steps to improve their wellbeing faster.” 

The market is ripe for disruption here, and an acceleration in change is expected over the years to come – not just in financial and broader wellbeing, but in the whole pensions and investments market. Artificial intelligence is allowing the industry to interrogate ever-expanding datasets at an exponential rate, providing much deeper analysis to employers and trustees, and allowing companies like Isio to adapt, in real time, to the learning preferences and pressing issues that members face. A future consisting of a personalised technological experience for customers is real. 

Organisations need to be advancing their thinking here in order to play a key role in driving a pensions and savings sector full of exciting technological possibilities. Chatbots, augmented reality and virtual reality can be used to enhance the member experience further, to a point where they can do everything without needing to leave the comfort of their home. This is the future of pensions. 

A forward-thinking, collaborative future 

Workplace pension schemes remain the cornerstone of the industry, but they too must evolve to reflect society’s ever-changing needs and attitudes. Essentially, what people want is a plan that’s easy to understand, cost-effective and flexible. Organisations should also be thinking about what they can offer beyond pensions too, as this is a rapid area of growth. 

To drive this change, the UK government, employers and the pensions and savings industry need to work together. Legislative and regulatory policy must be shaped in line with investors’ needs, employers must ensure that employees receive the financial advice and support needed to make the right choice, and savings firms must provide the best possible financial products. 

“To succeed, the pensions sector needs to adapt to new ways of working. We all need to work together moving forward,” says Coles. “Only by challenging the past can we ensure a better financial future for people.” 

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