The role of advice in a digital world

Working with government and other regulatory bodies, we can play our part to try to help consumers – but we can’t do it alone.

Choosing how to fund retirement is one of the most significant and complex decisions that people will ever make – so it is important they get the right support to help make that decision.

The question of how consumers want to take advice is one that hints at an opportunity to develop and modernise

Over the last 10 years we have seen significant changes to the way that pensions are provided. There has been a shift away from the employer or the state taking responsibility for people’s savings and retirement.

With that shift, individuals need to make informed decisions. Some may point to us as the regulator and say that we should be providing support – and we do. But for this to work, it needs to be a joint effort between government, industry, regulators and employers.

Supporting decision-making

There needs to be advice, guidance and information available to support people making these important decisions – but people have to work out what they need, how much this might cost and who should be paying for it. This can be exhausting before even getting started.

It is not surprising that many people are turning to the internet for quick solutions – so what will they find? They could come across information on the pension freedoms in news articles, and they might use the guidance on government websites such as Pension Wise. Trustees and employers could also facilitate their understanding, helped by the factsheet we are working on with the Pensions Regulator.

What about regulated advice?

So is there still a place for regulated advice, the traditional financial adviser, in a world of quick clicks and weblinks? The answer has to be a resounding yes. There will always be a need for good face-to-face advice. But the question of how consumers want to take advice is one that hints at an opportunity to develop and modernise.

Our Advice Unit, which we set up last year on the back of a recommendation in our Financial Advice Market Review, has a dedicated team to help companies developing new technological propositions – including fully or partly automated services – to bring these to market more quickly. So-called robo-advice is a growing area and we want to ensure that it is fit for purpose and offers proper consumer protection.

The work underway is essential to help tackle confusion and ensure future understanding, since decisions about how to fund retirement are only set to become more important. 

David Geale is director of policy at the Financial Conduct Authority

© Financial Conduct Authority