As illustrated throughout this report, and briefly covered as part of our Global Insights, there are large, very real problems to be solved in the way savers understand, approach and manage their retirement savings.
Three keys to success in addressing these, both for the industry as a whole and for individual organisations, offer the opportunity to improve financial outcomes hugely for people across the world.
Key 1: Bridge the advice gap, allowing savers to cross the chasm
The move from defined benefit retirement savings plans across the world to defined contribution plans moved financial risk onto individuals. Less spoken about, but extremely apparent in our research, is the effect of moving the ‘decision-making risk’ to savers as part of that process.
A large number of savers now face making their own financial decisions in retirement. Many want to make those decisions, but fully acknowledge they lack the fundamental knowledge to avoid mistakes and make the most of their retirement savings.
This is a huge gap that needs to be addressed quickly by the retirement savings industry. Professional financial advice is an option, but is costly, and it is unrealistic to expect all savers to pay for and take professional advice. Technology can unlock the ability to provide this at scale, while still providing advice that is personalised to each individual’s specific circumstances.
Tools, systems and guided journeys are required to provide the best outcomes for savers across the world. Just as automatic enrolment has put many millions of people on a retirement savings journey they would not otherwise have begun, ‘guidance by default’ journeys can assist savers reach the best financial outcomes in retirement.
Key 2: Traditional retirement is over – what now for the retirement savings sector?
It is abundantly clear from this research that the idea of retirement as a singular event is long gone. The traditional model of ‘retirement’ is over.
Savers continue to work part-time, savers delay retirement, savers want flexibility in how they manage their money rather than fitting to a one-size-fits-all mould.
It is crucial for financial services organisations supporting savers to recognise this, and to provide for savers’ needs in the run-up to, at the point of beginning to access retirement savings, and through the rest of their life.
Key 3: Control, flexibility and online tools are crucial
Control and flexibility are constant themes across savers in all countries. Savers now access their bank accounts online, with a real-time overview of where they stand, and the ability to flex their savings to meet needs as they arise.
Acknowledging this fact, while recognising the importance of guiding savers over the ‘advice gap’, offers the opportunity for the retirement savings sector – and the financial services sector at large – to genuinely support people in reaching the best financial outcomes. In a world where the one-size fits-all model of retirement is gone, technology can be used to support one-to-one relationships with savers, meeting their individual needs.