When given personalised guidance with short, simple text and which highlighted a withdrawal amount based on the customer’s circumstances, 76 per cent were able to withdraw enough to cover their immediate expenses but not so much that they unnecessarily paid higher rate tax.
This suggests that when guidance is tailored to a customer’s circumstances, it can have a significant positive impact on the effectiveness of their decision-making.
What’s more, our research revealed that participants value personalised guidance relative to generic guidance. For example, they were more likely to pay for guidance that was tailored to their circumstances and which highlighted salient options for them to choose.
Participants also indicated that personalised guidance was more likely to be sufficient information for them to take effective and informed decisions.
These findings are remarkable and very clear, strengthening the consumer case for creating a targeted support regime via the advice guidance boundary review.
Providers know so much about their customers already, and in conjunction with initiatives like open finance and pensions dashboards firms can help those customers make informed, effective decisions using the right data at the right time.
This will deliver both good outcomes for customers and avoid foreseeable customer detriment. This is what the new consumer duty is all about.
More help for customers, whether through targeted support or otherwise, can have a wider impact too. Driven by a desire to grow the UK economy, the government is making various changes to pension and Isa rules, and more support can help turbocharge many of these anticipated reforms.
If the value of pension saving and Isa investing can be articulated more clearly to customers, with more engaging and relevant communications, then we should see savers actively increasing their contributions or investing for the first time. This will help grow the pool of domestic capital available to be invested.
Our findings at ABI demonstrate that changes to enable more tailored support for consumers will have a wide-reaching positive impact across the sector.
At a time when the industry is calling for savers to pay their pension some attention, it is essential that we give them the tools they need to do so.
Yvonne Braun is director of long-term savings at Association of British Insurers
