Unilever launches guidance tool, but fear of giving advice still stops many

In their winter newsletter, trustees of the consumer goods giant’s scheme announced ‘People Like U’, an online segmented information tool that helps plan benefits by looking at example members in similar circumstances.

The website points members towards investment modellers and workshops explaining their possible income requirements at retirement.

At the moment I’d say trustees are very cautious about it, and they tend to shy away from anything that they think might even head towards advice

Lynda Whitney, Aon Hewitt

Experts said some trustees have been cautious about implementing guidance initiatives such as People Like U because they are wary of straying into the domain of advice.

“Guidance will tell you what you could do but should never tell you what you should do,” said Jonathan Watts-Lay, director at advisory firm Wealth at work.

He added that while trustees are liable for any advice they give themselves, they are not liable for or prohibited from giving members access to regulated advisers.

But Karen Partridge, head of UK and Australia client services at communications specialist AHC, said segmented information resources can still be helpful, because they reassure savers that others in their demographic are considering the same issues.

“I don’t think they are necessarily looking for advice,” she said. “An affirmation of what they are thinking is very often what they are after.”

She added that schemes concerned about giving advice should focus on education rather than tailored solutions.

“Choice is fairly key, giving people a range of options, and perhaps, if you were going to go as far as to show demographic tends, [giving] them the whole picture,” she said.

Regulators give support

In its March Financial Advice Market Review, the FCA and Treasury pledged their support for scheme providers seeking to give in-depth guidance to members.

They recommended: “The FCA and The Pensions Regulator should develop and promote a new factsheet to set out what help employers and trustees can provide on financial matters without being subject to regulation.”

The recommendation is currently being considered by the regulator, with no release date announced yet.

The FCA and Treasury also recommended a redefinition of advice in line with the European Union's definition set out in the Markets in Financial Instruments directive, and support for “services that help consumers making their own investment decisions without a personal recommendation”.

The previous definition was partially based on the principle that “if someone thinks they’ve had advice, they’ve had advice”, according to Watts-Lay.

Lynda Whitney, partner at Aon Hewitt, welcomed the proposed clarification of the FCA’s advice definition, saying it would encourage wary schemes to follow Unilever’s example.

“At the moment I’d say [trustees] are just very cautious about it, and they tend to shy away from anything that they think might even head towards advice,” she said.

“If, by clarifying the definition of guidance versus advice, they can give employers and trustees the comfort that says, ‘You’re not going to be thought to be stepping over the line by doing this’ then the better that would be.”

Decumulation requires advice

Automated advice solutions, or robo-advice, were also supported by the FAMR and are increasingly touted by industry figures as a way of delivering advice at lower cost.

“It does have the ability to ask some simple questions around the amount of risk people want to take and to give them funds that are of an appropriate risk level,” said Whitney.

But experts agreed that neither segmented guidance nor robo-advice in its current form are suited to complex issues like pension freedoms.

Watts-Lay said most savers do not need regulated advice while they are still accumulating their benefits, and could rely on guidance initiatives.

“When it comes to decumulation then I’d say most people probably do need advice, particularly with freedom of choice.”