Expert: Neil Cowell, Vanguard
Facilitator: Michael Riley, KPMG
- Belief is that older generations didn’t need to be educated about finance as:
- Our great grandparents’ / grandparents’ generation thought they needed to get a job and work hard until the day they died and not even plan for a retirement.
- Our grandparents / parents’ generation thought they needed to get a job for life and would be taken care of by their employer in their retirement through DB schemes / state pension schemes.
- These days people ‘still’ expect to retire but aren’t in a position to be looked after by their employer as DB schemes have been closed and DC schemes opened which puts the onus on individuals to prepare for their own retirement. At the same time there is reducing protection from the state pension scheme.
- However the current education system is not preparing people properly for thinking about their wealth on a lifetime basis especially Millennials, Generation X and Generation Y, etc.
- For those wealthy enough there are financial advisers who can provide the necessary advice and direction so that individuals are properly prepared for their retirement. For those with insufficient wealth, RDR has made that route economically unviable.
- The question that people in the group struggled with is “who should educate people about budgeting, saving, pensions, etc.?” especially in an age where the choice is getting wider (given pension freedoms and regulatory changes) and the decision-making more complicated e.g. accumulation phase, decumulation phase.
- Various views were offered:
- The financial planning sector should carry the burden through educational workshops or similar as they are potentially best placed to provide the necessary education.
- The manufacturers should as they have the deepest pockets and take the largest part of the wealth management value chain.
- The state through better education of children and the incorporation of budgeting and simple financial management into the national curriculum.
- Employers as part of the auto enrolment process and provision of pensions in the workplace.
- There were no conclusions about which of the above options was best and potentially a combination of all of them.
- Ultimately the group agreed there needs to be a consensus within the industry and with government as the long term savings ‘crisis’ is getting worse and not better.
Finally everybody agreed that a greater adoption of technology, especially digital delivery of services, could provide an answer as a way of reducing the ‘costs to serve’ for financial planning. Unfortunately the group felt that no one seems to have cracked this issue.