The Pension Dashboard?

Maria Espadinha of the FT Adviser reports, Pension dashboard could be 'foundation' for innovation:
The pension dashboard could help drive innovation in the same way open banking has, fintech provider Origo argued.

The company, which has been developing and testing a dashboard prototype, published a 13 page paper called Pensions Dashboard to Open Pension which explained how the project can deliver an "open pensions" system.

The pension dashboard, which is due to launch in 2019, is a project to allow savers to see all of their retirement pots in one place at the same time, giving them a greater awareness of their assets and how to plan for their retirement.

Anthony Rafferty, managing director at Origo, said there had been suggestions the dashboard could leverage the open banking approach, since this would lead to a free market environment where innovation helped improve the customer experience.

Open banking is aimed at increasing competition and allows customers to share their current account information securely with other third-party providers, who can then integrate this information into their services.

Examples of market entrants making use of open banking are Moneyhub, Yolt, and Squirrel Investing.

A fully functioning dashboard will allow for delegated authority to regulated financial advisers and the Single Financial Guidance Body, to inform retirement planning, to obtain pension comparisons, or to populate a budgeting style app, he argued.

Mr Rafferty said: "We believe there is a need for a specific approach for the pensions industry.

"The current proposals for the pensions dashboard should be the catalyst for consumer engagement, building on the success of open banking to deliver an open pensions landscape, incorporating highly sophisticated centralised controls for consumer protection, privacy and consent management.

"The pensions dashboard lays down the firm foundations the industry needs to enable fintech innovation."

But Mr Rafferty said while it was natural to draw parallels between the two initiatives, there were specific requirements in the pensions industry which required different approaches.

He said: "Open banking was regulatory driven as a means to increase competition in banking.

"The pensions dashboard, on the other hand, is designed to help people find their pension pots wherever they may be, in a secure manner and obtain information about them."

Mr Rafferty said another difference was the composition of the markets.

There are more than 300 pension providers in the UK of "all shapes and sizes - each with different legacies, online capabilities and supporting architecture," he noted, but with open banking only nine large banks were involved.

"Scale in the pensions sector needs to be tackled differently," he said.

Another key factor was that people know who they bank with and their online banking credentials, Mr Rafferty said.

He said: "Compare this to the pensions world where a consumer may have up to 11 pension pots and may not know of or have lost track of some.

"Furthermore, not all pension administrators will have issued credentials for online access as some simply do not have the capability to do so."

This meant the dashboard required a single identity verification point and a central Pension Finder Service to search the entire market to ascertain where an individual’s pensions may be, and to feed the information back to the individual, through the dashboard screen.

"This is all quite different to the open banking approach," he stated.

"Also significant is the complexity of pensions information – the differences between arrangements such as DB and DC arrangements, for example," he added.

Last month, the government said it would let the industry take lead on the project and shied back from committing to force providers to submit client data.

Paul Gibson, managing director of Granite Financial Planning, said: "The pension dashboard could lead to an open pensions system but may struggle to gain traction particularly with some pension providers who struggle to even provide an online valuation system that works.

"Newer pensions should not be an issue but legacy products may prove problematic."
I don't know, I'm not an expert on the UK pension system but the pension dashboard sounds a lot more complicated than it needs to be. Nevertheless, it is a step in the right direction, if it gains traction.

Last week, I spoke with Randy Cass, founder and CEO of Nest Wealth, Canada's first digital wealth manager. Randy is a former fixed income/ quant manager at Ontario Teachers' who left that organization and subsequently founded this company which is a great success story.

Anyway, it was a very interesting conversation, we spoke of a recent survey which states, 69% of Canadian Employees Say They Would Leave Their Job Without a Company Savings Plan to Go to a Company With a Group RRSP:
  • Nest Wealth releases study examining the link between employee access to group investment tools and workplace happiness and productivity
  • Nest Wealth study shows how financial worry and retirement planning can have a negative impact on business performance, company culture and overall employee happiness
  • 79% of those able to contribute to a group savings plan at work feel they know how much they need to save for retirement, alleviating stress1.
  • Overall results conclude that offering employees a way to save for their future made a difference to their overall happiness, confidence and consequently their work performance.

TORONTO, Oct. 3, 2018 /CNW/ - Today, Nest Wealth, a leader in financial investment technology, released a study examining how financial worry and retirement planning impact business performance, company culture and overall employee happiness across the country. The report, titled "Strengthening Productivity: How to Relieve Employee Stress and Grow Your Business", finds that the simple act of offering employees a way to save for their future at work made a significant difference to their overall happiness, confidence in their financial future and consequently, their work performance. The full report can be found here.

The study reveals that 42% of Canadian employees rank 'money' as their greatest stress, ahead of work (23%), personal health (19%) and relationships (17%). It's clear that Canadians are worried for their financial future - 65% of men and 75% of women stated that they are afraid they aren't saving enough for retirement. Collectively this stress is making Canadians lose sleep, reconsider past financial decisions, and argue with partners. The impact of this tension extends far beyond the personal lives of employees. Industry statistics show that unhappy workers cost North American businesses over $350 billion annually in lost productivity.

To build a more secure financial future, 82% of Canadians believe it is important to have a Group Savings Plan through work. Unfortunately, millions of Canadians lack access to a Group RRSP or some other form of savings mechanism offered through an employer.

Organizations that do not offer a Group Savings plan should take note - 69% of Canadians say they would choose a new job with a plan over a current one without it. This could clearly impact the ability of small to medium-sized businesses (SMBS) to retain talent if they don't offer Group RRSPs 6; 79% of those who contribute to a plan feel better informed and that they know how much they need to save for retirement, alleviating stress.

Historically, the complexity in offering and managing an employee group savings plan, particularly for SMBs, was one of the main reasons employees lacked access to a Group Savings Plan. In fact, 83% of SMBs cited administrative simplicity as a critical factor when deciding to offer a retirement plan for their employees. This is particularly important when HR resources are limited.

To overcome these administrative challenges, Nest Wealth developed Nest Wealth at Work, Canada's first, fully-digital, group RRSP platform for SMBs. Employers now have the ability to attract, retain and motivate employees by offering a group RRSP plan that is low cost, easy to use and effortless to administer.

"We know that happy employees collaborate better, make stronger leaders, think more creatively, are willing to take on new challenges and are less absent," said Randy Cass, Founder and CEO of Nest Wealth. "Our study found that the simple act of offering a Group RRSP Plan can significantly increase employee's confidence and sense of security both in the workplace and at home. By helping alleviate the stress related to financial security, Canadian companies can have a greater chance to attract and retain talented employees, play a positive role in their employee's lives and create a healthier company culture and a stronger Canadian workforce."

About Nest Wealth

Through their leading-edge technology platform and industry-tested investment rules, Nest Wealth Asset Management Inc. (Nest Wealth) provides investors with a smarter, quicker way to reach their financial goals. Nest Wealth offers an automated, low-cost and transparent direct-to-investor wealth management solution that makes it easier for investors to obtain sophisticated management of their financial portfolio. Nest Wealth Pro offers advisors and investment firms a white label practice management solution to better serve their clients through simple onboarding, greater transparency and fully-integrated back office and compliance functionality. Nest Wealth at Work, a fully-digital group RRSP plan, is the only group RRSP offering developed specifically for small-to-medium-sized businesses to quickly and easily offer their employees a path to financial well-being. Together, Nest Wealth has built a better way to invest.
I truly enjoyed my conversation with Randy and think Nest Wealth is onto something here, namely, simplifying group RRSPs to make them easy for employers at SMEs to offer them to their employees.

The way Randy explained it to me, it's extremely easy to set up and onboard employees and it makes a lot of sense, helping them save for the future.

I told him a couple of years ago, I did a major study and presentation on robo-advisors so I know all about Nest Wealth and its competitors.

I also told him that while I like robo-advisors and think they offer a lot to employers and employees looking for group RRSPs, my preference is an enhanced CPP managed by the CPPIB as the ultimate pension solution because they invest across public and private markets all over the world at a very reasonable cost and are delivering great long-term results.

Still, I truly believe Randy is onto something important and told him to contact the Business Development Bank of Canada and Export Development Canada to inform them of their products for SMEs.

A lot of Canadians are stressed out about their retirement and they don't have any way to invest in a group RRSP at work. Given the extinction of defined-benefit pension plans is almost upon us, it's no wonder so many Canadians are stressing about retirement.

Is the pension dashboard the solution? No, it's a lot more complicated than that. We need policies that work and just like we cover everyone for healthcare, we need to cover people properly for their retirement.

That's another conversation for another time.

Below, Randy Cass, CEO/Founder/Portfolio Manager, Nest Wealth on founding Nest Wealth and the future of robo advising. Very sharp guy and very nice too, I really enjoyed our conversation.