Picture the scene: it is 2027, and we are one year on from the official launch of pensions dashboards. The retirement planning landscape looks totally different, but have advisers grabbed the opportunity with both hands, or let it slip through their fingers?
Pensions dashboards are set to transform the financial planning space. Why? Partly, it is because pensions are a difficult topic to broach.
People know they have to do something to save for the future but often do not know where to start. Dashboards will give them the information they need to make better decisions along the way. That is hugely empowering.
As well as improving financial literacy and engagement with pensions, dashboards could also uncover new sources of wealth in the form of lost and forgotten pension pots – with the latest estimates suggesting these could total an astonishing £37bn.
Imagine if someone thought they had £100,000 in retirement savings, but a dashboard located a lost pot worth £400,000. All of a sudden, they have got half a million pounds in pension savings and need advice and guidance.
How are advisers going to step up to the mark with these potential new customers?
If the banks set up their own pensions dashboards, how are non-banking partnered financial advisers going to get recommendations and new customers from that space?
It will be a land grab, but it should allow individuals to have a better, more holistic understanding of their total pension provision.
While for some it may reveal some nice surprises, others may discover they have a dozen pots with not much in any of them. Even in this scenario, at least they have that information and are able to act rather than discovering this on their 67th birthday.
While consolidation might be the solution for some of these individuals, it will not be right for everyone. Larger advice firms might consider whether they could offer a service to these consumers at the lower end of the mass market.
While the industry has often mulled robo-advice in the past, dashboards will allow for more automated solutions to the current advice gap, and that creates a lot of opportunity.
We are already talking to a lot of organisations about what digital advice could look like and it is an exciting area for future innovation.
Some countries, like Australia, have already embraced these types of technologies with us, and in my opinion it is only a matter of time before we really start to see them take off in the UK.
Transacting through dashboards
Pensions dashboards will provide information on accrued values of pension pots, and the details of estimated retirement income. It will also include links to documents that will make it easy for advisers to quickly compare fees and charges.
Details like these might be more opaque to the average consumer, and there is a fear that individuals, even with the best intentions, may make decisions to move or consolidate pots without knowing what future benefits they may or may not lose.
