A few weeks ago I read a report about the new retirement realities with the title “The Future of Global Retirement” by Smart. Smart is the global retirement savings technology platform provider that powers the Smart Pension Master Trust. With two remarkable conclusions which triggered me to approach them for an interview. Here you can read the interview I had with Michael Watkins director at Smart. https://www.smartretire.uk/ https://www.smart.co/

The first conclusion which draw my attention in “The Future of Global Retirement” report was this: Bridge the advice gap, before it is too late. There is a huge ‘advice gap’ that the retirement industry needs to address quickly. 50% of those nearest to retirement (age 55+) have never received financial advice about retirement. Professional advice is an option, but is costly. Technology can unlock the ability to provide this at scale, without either prohibitive costs or the inefficiency of blanket education programmes. From “The Future of Global Retirement” by Smart

Question Peter de Kuster: How does Smart Pension see their own role in bridging the advice gap?
Answer Michael Watkins: Through Smart Retire we have created a product that aims to serve the underserved – providing robust guidance and education to the majority of savers who have never engaged with financial advice.

Question Peter de Kuster: What experiences do you have at Smart Pension in bridging the advice gap and what are your lessons learned?
Answer Michael Watkins: Smart Retire launched in April 2021 with seven members already using the product and a further thirty in the process of signing up. The key lessons learned are that providing information in plain English, removing jargon and providing outcome-based information significantly improves engagement and comprehension of the options available and how best to access retirement assets. Given the level of either comprehension of retirement products or financial literacy, simplicity is key to improving outcomes. With “outcomes” I mean what every individual wants to achieve. People want to achieve positive outcomes.

Question Peter de Kuster: What in your vision could be the role of storytelling in bridging the advice gap? I have already seen Smart Pension use great storytelling animation in explaining retirement concepts to people. Could this be further extended?
Answer Michael Watkins: Storytelling provides a simple mechanism for delivering a range of information. We are committed to simplifying communications to savers and therefore we will continue to explore and expand the range of communications that we use in the storytelling format.

Question Peter de Kuster: Would it be important in your vision that clients design their own retirement story? Assisted by technology? Combine high tech/high touch so to speak.
Answer Michael Watkins: Definitely, Smart strives to empower clients to provide leading-edge technology and services through the use of Smart’s proprietary technology. Our approach has, and will continue to be a collaborative one; tailoring our offering to our client’s needs.

Question Peter de Kuster: Do you believe that every person is completely unique in how they see their future retirement or could tools like persona and archetypes be used to help guide people?
Answer Michael Watkins: The needs of people in retirement can vary widely. Our research shows that you can create a framework to support in decision-making and retirement planning and optimisation, and that’s where the use of persona and archetype tools can be useful – providing a starting point for retirees to shape their retirement to meet their needs.

Question Peter de Kuster: Do you believe people can make their retirement decisions alone in a digital manner with a trusted advisor or do they have meet a person face to face somewhere in the process?
Answer Michael Watkins: The Smart Retire value proposition is to empower and enable people to manage their retirement by themselves, digitally. Providing that the framework is rigorously tested and can handle multiple scenarios and supported by comprehensive guidance, there’s no reason why people should not be able to manage their retirements successfully by themselves.

The second conclusion of The Future of Global Retirement report which had my attention was this: Retirement is no longer a one-off event. Just 16% of savers still consider retirement as a single event – a startlingly low proportion. Retirement is seen by 45% of people as a process, while almost a third plan to continue working into ‘retirement’. Savers need a retirement solution that meets their needs ‘to and through’ retirement rather than just ‘at’ retirement. From The Future of Global Retirement report by Smart

Question Peter de Kuster: What are the consequences in your opinion of seeing retirement as a process for bridging the advice gap? Does a traditional storyline like ‘what money do you need at age X” which dominated the retirement advice business still suffice or do we need other and more diverse storylines altogether?
Answer Michael Watkins: As I said, I think the focus needs to be on the outcome that a person is looking to achieve, rather than a fixed amount. Monetary amounts can often be abstract to people and therefore talking in real terms helps better connect their desired outcome to their financial capability in retirement. Guideline monetary amounts can be useful in complementing information around outcomes but in isolation, I don’t believe they provide the relevance or tangibility that most people need when thinking about and planning for retirement.

Question Peter de Kuster: Why do people start to see retirement as a process do you believe? Do they still see retirement as only an economic event or is retirement a life event happening over a period of time? What does this mean for the advice people will want about retirement? And life/work after age 55+?
Answer Michael Watkins: Our research indicates that people no longer see retirement as a one-off event, therefore, it’s important for them to be able to plan for the different stages and financial requirements that they may have at those stages. Whilst guidance can definitely help fill the advice gap, there’s still a place for advice in the process. The main requirements that people have around advice are that it’s on-demand and focused on key financial decisions, rather than holistic financial planning.

Question Peter de Kuster: Do you believe that people are more interested in a phased retirement? In flexibility? In control of their own work/retire pace? What will this mean for future retirement advice and retirement products and services?
Answer Michael Watkins: Phased retirement and the need for flexibility are key in the current and future state of retirement. It relates directly to the trends that you see with people living and working longer, as well as an increase in the need for things like aged care, alongside an increased cost of living. The factors alone mean that the products that people require in retirement, as they stand, are barely fit for purpose. To come back to the point, few products focus on outcome and even fewer provide clear information as to the benefit of using one product over another ie why it would be useful to any given person. All of that will need to change if the retirement industry has any hope of meeting the needs of an apathetic generation/s who will happily place their retirement savings in their bank account as soon as they can access it – choosing to manage the money themselves, rather than leaving it to the professionals.