It has never been easy, but now it’s going to be damn difficult. Auto-enrolment is underway and is the precursor to compulsory pensions which, if our politicians had any strategic thinking, they would be introducing immediately. However, the potential client base for this is quite understandably suspicious and often quite hostile. This shouldn’t be unexpected; after all, pensions don’t exactly have an enviable reputation.
From awful performance, poor governance, inappropriate charges and lack of flexibility, it is hardly surprising that so many are so disenchanted.
For most, this is one of the most important long term financial issues we should consider. However, taking my money today on a promise for a better tomorrow is not a statement that many would believe, especially if that was coming from an insurance or pension company, let alone a bank, stockbroker or investment manager.
Looking back at what happened in Australia is illustrative. When compulsory pension savings were introduced there, many had severe reservations, not least of which was that this was just another stealth tax. After all, politicians have an awful track record of raiding pension savings schemes. I am not just talking about the financially irresponsible politicians and blaggards of somewhere like Argentina where this is a regular action of their political scoundrels, but closer to home where our own then Chancellor Brown levied an extra multi billion cost onto what was then a highly regarded national pension system.
It took several years for the Australian citizen to appreciate that their savings were theirs, and visible, measurable and achieving something. However, to get to that stage it took the typically forthright Australian attitude to get the message across. I recall the ‘dog food’ adverts, where viewers were shown what could happen to them as pensioners if they took no action – yes they would be reduced to only be able to afford dog food for dinner. Well that seemed to work – but we need to take this further and we can do so with good technology to show clearly what clients actually have, whether it is on track and enough, whether its providing the right returns at the right risk, and above give the clients the key word we all need for our finances and the economy – confidence. Confidence that their future as a result of their efforts and actions is secure and that it is not just a confidence trick!