The People’s Pension, in conjunction with LV= is offering its members fully regulated financial advice for only £49 per person. Sara Benwell finds out how.

”In February last year the regulator put some guidance out for trustees around how to communicate the new pension freedoms when they come through, our trustees took that very seriously,” says Roy Porter, director of business development for the People’s Pension.

He feels that while many schemes were updating their investment strategies to deal with the new DC landscape it was also crucial to offer members of The People’s Pension more help to navigate the complex choices available at retirement.

The solution, whih gives members a personal recommendation based on their specific financial situation, will be available for just £49 per person.

Robot

That’s why the mastertrust has decided to work with LV= to give its members access to a fully regulated robo-advice solution - RetirementWizards.

The mastertrust has also beefed up its free guidance – again in conjunction with LV= – and will be offering an online report that gives members four possible uses for their pot and shows how long it could last.

Porter says: “From next month, the 2.3 million members of the People’s Pension and our historic construction industry scheme will have access to a greater level of information on our website.

The solution will be available for just £49 per person”

“Working with LV= we will be enabling them to use a free online guidance report and then we will also enable them to use the online advice tool at a cost of £49, which we believe is ground-breaking for the industry.

Keeping it cost-effective

Unbiased.co.uk’s Value of Advice report 2015 found that people who receive professional financial advice could have had on average £48,279 more for their retirement than those who didn’t.

But despite the clear benefits for retirees - YouGov research for The People’s Pension found that only one in five of the general public (18%) currently use a financial adviser.

Consumers typically have to spend somewhere between £500 and £2,000 to get regulated financial advice”

And people’s expectations around the cost of face to face independent advice is out of step with what the market is offering.

Porter says: “What’s interesting is that consumers said they would be happy to pay is £120 for face to face advice. In my due diligence I couldn’t get anywhere near that and generally speaking even in quite simplistic situations the starting point was £500.”

Consumers typically have to spend somewhere between £500 and £2,000 to get regulated financial advice.

The People’s Pension’s own member research indicated that people would be willing to pay on average up to £103 for an online solution – almost twice what their members will have to pay

Four things that now cost more than regulated financial advice:

1) A ticket to watch Manchester United play at Old Trafford (you can pick up a ticket for the Sir Alex Ferguson Stand, Tier One, Upper Wings – for £50)

2) Four whole chickens from Nando’s (at £12.50 each, four would cost someone £50)

3) Two tickets for Chessington World of Adventures (a fun theme park day for two will cost you £55.20)

4) The view from the Shard (Two people who want to take in the iconic view from Shard will need to pay £59.90)

LV= already offers robo-advice direct to consumers, but at £199 per person.

John Perks, managing director of retirement solutions at LV= explains the reason the People’s Pension can offer the service more cheaply is because of the wealth of information that the scheme has about its membership.

“It’s all about member access and actually the fact the People’s Pension know their members and know when they are retiring. You can make the delivery of that very appropriate for the time when the customer needs it. We believe that with that focus and hand-holding members into the service you can make it quite efficient,” he says.

How it works

Members will be directed to a specific product by the robo-advice tool. This can be an annuity offered by one of a number of providers, cash or UFPLS through the People’s Pension, or LV=’s own flexi-access drawdown product.

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RetirementWizard

Perks is keen to point out that LV= is not a fund manufacturer. He explained: “We use BlackRock passive funds and our drawdown service is 25bps so it is very aggressively priced – it’s priced for the open market.”

The LV= panel of annuity providers

  • Aviva
  • Just Retirement
  • Prudential
  • Legal & General
  • Hodge Lifetime
  • MGM
  • Canada Life
  • LV=
  • Retirement Advantage

Both the free online tools and the advice solution will be available for members from the 15th March, but the People’s Pension will start drawing members’ attention to it in wake up packs going out before then.

An appropriate regulatory framework

If members believe they have been given poor advice they will have the same rights as if they had used an independent financial adviser.

And LV= has been working closely with the FCA to bring the product to market.

We just really believe that this is the right thing for our membership”

“We treat the retirement wizard as if it is one of our own advisers, we do the governance for it, we train it, test it, monitor it, and we take the regulatory risk,” says Perks.

And the mastertrust is confident that this solution will remain relevant, despite the Financial Advice Market Review which is due out in April. “We thought this through and we just really believe that this is the right thing for our membership regardless of what comes out of the FAMR review,” said Porter

Looking to the future

LV= is also looking at how the robo-advice product can be used for other areas of financial services.

Perks says: “A lot of what we are doing is looking at how we bring this advice solution to other segments of the market. We’ve been able to tailor for B&CE’s needs but we also believe this has multiple applications.

Pension freedoms are very exciting but also scary. Now there’s a solution”

“Over time I think we will look at whether we can use it for equity release or protection and add more modules to it.

“But the clear and present danger is people not having access to advice at-retirement… Pension freedoms are very exciting but also scary. Now there’s a solution,” he concludes.