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What can we learn from the mistakes of others

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AHC’s Roger Hattam looks to his experiences and explores what the pensions industry can learn from the mistakes and successes in other industries.

Drawing comparisons
Nine months into the role of CEO at AHC and thinking back to my previous role in the energy sector, it strikes me that they are essentially parallel universes working in different directions.
All around us, there is a hard shift to personalisation and customisation and the need we see in members to be more personalised and segmented. This is in contrast to a move towards lots of one size fits all initiatives like master trusts. Both appear to be building momentum but in a different direction.
Making the same mistakes
Worryingly, I feel a sense of the pensions industry making the same mistakes the energy one did a few years ago. Reacting to the fact that many energy customers were paying far more for their energy than they potentially should, Ofgem determined that a way to address this was to standardise what information a customer’s energy statement should contain - and in what format - and rolled this out across the industry.
They had the right intentions, of course. It was created to provide clarity and limit misleading information. Essentially restricting the ability of energy suppliers to hoodwink consumers into staying on a higher tariff than may available to them.
But even though the statement clearly told consumers when they were not on the cheapest tariff, and featured a barcode to link them directly to a comparison tool, consumers failed to engage with it and take the action Ofgem believed they would.
The only thing in its favour was the standardised approach. It didn’t move with the times in terms of what the customer needed or lead to a change in their behaviour.
After four years of persevering with an industry devised solution to self-regulate, the Government lost patience and introduced a price cap. In my opinion, it was the wrong industry solution which had the effect of trashing Ofgem’s reputation together with the profitability of the sector.
Positive outcomes
Now I’m focused on impacting positive outcomes in the pensions industry, I wonder if we could be walking into the same trap with the single statement. Do we know that we are actually moving member understanding forward?
Everyone would agree that the principle of a shorter, standardised statement is a good starting point. What we need to ensure next is that we are measuring the actual impact statements are having on the level of members’ understanding and the actions that they are taking as a result.
It seems to me that the emphasis on just making something shorter and standardised doesn’t really scratch the itch. We have to demonstrate that all communications drive better member outcomes. Every scheme needs a communications strategy that has clear, measurable objectives that drive the member forward.
Have we in fact landed on a Henry Ford approach, in that you can have any colour, as long as it’s black? Rather than meeting the core need of better understanding? We need to make sure that we are measuring what impact we are having.
Where can we improve?
If we just produce communications that don’t drive a positive impact, then we are guilty of just putting lipstick on a pig. We come up with lots of initiatives in our industry that look like we’re doing stuff.
We’ve got lots of numbers available to us but we’re still not really looking closely enough at what data can tell us to drive segmentation of our audiences, so that we stand a better chance of our members actually understanding why we’re communicating with them and what they should consider as a result.
Don’t get me wrong, there are great things in the single statement but my question is, “does it really address its fundamental purpose of improving engagement or understanding?”
Interventions are needed to ensure that outcomes are being truly, positively impacted. We need to make sure we understand and meet our audiences’ needs.
The risks
No amount of trying to reduce or standardise information that fails to impact engagement and understanding will be successful in solving the problem we have. Members not addressing their financial needs in retirement early enough to make a real difference to the lifestyle they will be able to enjoy.
There is a risk here for both the industry, members and wider society. If people cannot afford to retire or face a retirement in poverty, they will need help from somewhere. Don’t we have a duty in this industry to ensure that we do everything we can to limit the number of people who end up in that situation?
If a future Government decides that it needs to act to ensure that all communications demonstrably improve outcomes to minimise the burden on the State, we may end up with unintended consequences just like the energy industry.
 Roger Hattam, CEO at AHC