This robust step should further cement a strong adviser-client relationship and increase data security. But to bolster client protection, it is paramount advisers have an awareness of potential consumer harms and that administrators ensure adequate protection measures are in place.
A new opportunity
As dashboards highlight lost retirement savings for the first time, advisers can look to attract a whole new set of clients, ready to put these small pots to better use. Utilising the dashboard as a starting point will help guide conversations with clients in a quick, efficient, and visual manner – saving time and money for all involved.
What can today be a laborious task, which often puts many people off from even approaching pension consolidation, should become a smooth process with all information readily available at the fingertips of an adviser.
Advisers can look to provide a frictionless process, focusing on the ‘value-add’ of providing counsel and helping clients reach the best possible financial outcome for retirement. Furthermore, not paying fees on multiple pots means advisers can take a more informed approach on the projection valuation of a client, while taking a data-backed view on whether they should be increasing contributions.
For advisers to take the lead in adopting this technology, it will be important they familiarise themselves with the requirements and how to comply with new regulations. Gaining confidence using the dashboard and understanding the lay of the land will be vital in ensuring advisers are ready to adopt this technology.
Searching for consolidation advice
As people look to review their pensions via the new platform, we expect it will serve as a catalyst for savers to ensure they are seeking counsel from advisers, especially when it comes to pot consolidation.
Our research found that more than two-fifths (44 per cent) of consumers have not bothered to track down savings from a previous employer. In turn, the antiquated UK system places a heavy burden on advisers when sourcing and consolidating lost pots. If advisers are unable to locate the whereabouts and value of a client’s pension, it becomes difficult to gain a complete picture and therefore advise accordingly.
As a result, people are building up small pots and are in many cases losing track, misplacing paperwork, or forgetting about the previous schemes they invested in. One of the risks associated with this is that, depending on the size of the pot and other factors, some savers may pay more in fees than is necessary.
As people become more aware of their multiple pots, it presents the perfect opportunity for advisers to assist. Although many clients may wish to consolidate pots, this is not automatically the best course of action for all clients. Therefore, advisers have a crucial role to play in helping clients understand when and if it is in their best interests to consolidate.
