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Robo-Pensions: The Digital Revolution
Hogan Lovells International LLP, Atlantic House, Holborn Viaduct, London EC1A 2FG
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Adrian BouldingDirector of Retirement, TISA – Seminar Chair
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Agenda
• Opening remarks by Adrian Boulding, Director of Retirement, TISA
• Ben Goss, CEO, Distribution Technology ‘The Digital Distribution Review’
• Andrew Martin, Product Strategy Director, Dunstan Thomas ‘A statement of purpose’
• Panel Session: Debate Chair Dirk Paterson, Director, Corporate Comms Shop
• Pro Inertia: Baroness Drake CBE, former Pensions Commissioner
• Pro Inertia: Andy Tarrant, Head of Policy and Government Relations, B&CE Benefits
• Pro Engagement: Paul Sturgess, Director Private Sector, Equiniti
• Pro Engagement: Phillip Walter, Group Chief Executive, Aquila Heywood
• Coffee Break
• Marc Hommel, Wobi ‘Dramatic improvement in consumer experience and financial health: a country case study’
• John Salmon, Partner and Susan McKiernan, Counsel, Hogan Lovells International LLP ‘Digital Innovation: Risk vs Reward’
• My pension is not big enough: Interview by Dirk Paterson, with John Greer, Pensions Technical Manager, Old Mutual Wealth
• Closing remarks by Adrian Boulding, Chair
• Network reception with wine and canapes
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Ben GossCEO, Distribution Technology
Ensuring Investment Suitability©2017 Distribution Technology Ltd. All Rights Reserved.
Ben Goss CEO, Distribution Technology
24th May, 2017
[email protected] | @BenGoss
tisa seminar Robo-Pensions: The Digital Revolution
©2017 Distribution Technology Ltd. All Rights Reserved.
Technology comes in waves
6
Source: NMG Research IFA Census and DT. Illustrative only
©2017 Distribution Technology Ltd. All Rights Reserved.
These waves are becoming more powerful
7
Source: Elektormagazine.com, 2015
©2017 Distribution Technology Ltd. All Rights Reserved.
We have seen several waves impact on our industry
8
Desk top
cashflow
modelling
US online
advice
SaaS based
financial
planning
services FAMR support
for automated
advice
Insurers’
laptop needs
analysis UK online
advice
FSA
Ensuring
Suitability
Widespread use of risk
based stochastic modelling
©2017 Distribution Technology Ltd. All Rights Reserved.
Financial planning on its best day
9
“Helping customers achieve their goals
at a risk and cost that’s right for them”
©2017 Distribution Technology Ltd. All Rights Reserved.
Financial planning FinTech has revolutionised financial planning in
the last ten years
“We always overestimate the change that will occur in the next two years and underestimate
the change that will occur in the next ten. Don’t let yourself be lulled into inaction.”Bill Gates, The Road Ahead, 1995
©2017 Distribution Technology Ltd. All Rights Reserved.
The rise of risk based, outcome investing has already “structurally
changed” the industry
11
Net retails sales by different
investment objectiveFunds under management of tracker funds by
index investment type
Source: Investment Association, 2017
©2017 Distribution Technology Ltd. All Rights Reserved.
Demographics are increasingly challenging
12
Mean client age
2011: 51
2016: 56
Median wealth for
client under 45
2011: £27k
2016: £45k
Source: Dynamic Planner data, 150,000 records September 2016.
Age distribution of clients pre and post RDR
©2017 Distribution Technology Ltd. All Rights Reserved.
Digital potentially changes everything
13
“Who do you trust?”
Agents
Internet
Source: ABTA 2004, Mintel 2012
©2017 Distribution Technology Ltd. All Rights Reserved.
The question is; ‘How far can it go?’
14
Level
4
Holistic
Planning
Level
3
Personal
Recommendations
Level
2Guidance
Level
1Needs
©2017 Distribution Technology Ltd. All Rights Reserved.
Financial planning is not holiday planning. Customers need advice
15
Long term
thinking hurts!
Risk, trust and
capability
The tyranny of
choice
©2017 Distribution Technology Ltd. All Rights Reserved.
5 big challenges to the use of FinTech
16
Priorities
and
delivery
Bringing
advisers
with you
Building
bridges
Engaging
customers
Ensuring
suitability
©2017 Distribution Technology Ltd. All Rights Reserved.
Enhance
services
Reduce
risk
The potential benefits though are significant
17
Reduce
costs
Transform
access
©2017 Distribution Technology Ltd. All Rights Reserved.
Suitability: The more you automate, the more asset and risk model
integrity matters
18
©2017 Distribution Technology Ltd. All Rights Reserved.
The aim is to create a mandate and relevant benchmark for investment management
19
Source: Dynamic Planner, illustrative
©2017 Distribution Technology Ltd. All Rights Reserved.
Risk targeting - there is a new IA sector and the FCA asset management review is looking
for relevant benchmarks
20
Source: Dynamic Planner, Risk Profile target asset allocation performance
©2017 Distribution Technology Ltd. All Rights Reserved.
With the right building blocks in place, future developments will
change the game
21
Account
aggregation
Automated
advice
Artificial
intelligence
Social
networks
Frictionless
financial planning
©2017 Distribution Technology Ltd. All Rights Reserved.
AccessAdvice. Hybrid model turns painful to profitable
22
Reduces time to
serve ISA from 4 hrs
to 30 mins
Investors pay less for
regulated, whole of
market advice
Powered by Dynamic
Planner’s trusted asset
and risk model
Fully configurable white label
automated advice service for
adviser website “robo in a box”
Ensuring Investment Suitability©2017 Distribution Technology Ltd. All Rights Reserved.
Ben Goss CEO, Distribution Technology
24th May, 2017
[email protected] | @BenGoss
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Andrew MartinProduct Strategy Director, Dunstan Thomas
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Panel Session: To engage or not to engage
Debate Chair: Dirk Paterson, Director, Corporate Comms Shop• Pro Inertia: Baroness Drake CBE, former Pensions Commissioner
• Pro Inertia: Andy Tarrant, Head of Policy and Government Relations, B&CE Benefits
• Pro Engagement: Paul Sturgess, Director Private Sector, Equiniti
• Pro Engagement: Phillip Walter, Group Chief Executive, Aquila Heywood
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Marc HommelWobi
Consumer empowermentThe Israeli experience of aligning consumer
needs and provider commercial success
Marc Hommel
+44 780 176 7373
ROBO-PENSIONS: THE DIGITAL REVOLUTION
24 MAY 2017
Imagine …
• Instantaneous on-line access to dashboard
covering all retirement savings…
Imagine …
• Instantaneous access to on-line dashboard
covering all retirement savings…
Imagine …
• Instantaneous access to on-line dashboard
covering all retirement savings…
• Clarity around contribution of investment
performance and charges
Imagine …
• Instantaneous access to on-line dashboard
covering all retirement savings…
• Clarity around contribution of investment
performance and charges
• Transfers from an employer or provider to a
new provider within 72 hours
Imagine…
• … plus rest of your financial health (debt, wealth, expediture, protection and healthcare)
Imagine…
• … plus rest of your financial health (debt, wealth, expediture, protection and healthcare)
Imagine…
• … plus rest of your financial health (debt, wealth, expediture, protection and healthcare)
• Insight in easily understandable format and language
• Actions for improving your financial health
• Guarantee that your data won’t be shared without your consent
Information
and Insights + Options for
Actions
A world in which people are engaged in their retirement savings and beyond
Yuk! Pensions• For old people
• Distant
• Complex /opaque
• Jargon
• Boring
• Remote
• Standardised
• Not relevant
Engaged! Money• My money
• Like a bank account
• Transparent
• Meaningful
• Impactful
• Accessible
• Personalised with convenience
• I want to be involved
A world in which people are engaged in their retirement savings and beyond
• Propensity to save 25% increase
• Charges paid 20%-50% saving
• New business acquisition costs 40% lower
• Transfers 10% of Retirement Accounts have been transferred, more than last 20 years combined
… due to a better alignment between providers and consumers
• Line of sight
• Transparency
• Improved and more intimate customer relationships
• Lower business acquisition costs / lower lapse rates
• Choice of customers
• Lower costs
How did we get here?
Changing consumer demands
• Diversity
• Instant gratification
• Lack of trust
• Data ownership
• Empowerment
Affordable
technology
User
experience
Database
+
Failure of
industry to
act
Enforced by
law changes
+
Lessons learnt
• Forget asking people what they want
• Ditch the jargon
• Consumer (not product) centric
• Focus on the “Why” and not on the “Why not”
• Simplify!
• Consumer interests includes having robust successful providers
• Beware the financial services “mindset”
• Adapt or die!
Providers must adapt or die
Customer
Interface
Data
Working with providers and consumer groups in the UK to bring this experience here
• Diversity of fear versus hope
• Business case informed by ambition, pain threshold or law?
• Ownership of the opportunity?
• Consultant-fest
• Product focus
• Extent of congruency between words and behaviours?
CHALLENGE OR OPPORTUNITY?
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John Salmon and Susan McKiernanHogan Lovells International LLP
John Salmon, Partner, Hogan Lovells
Susan McKiernan, Counsel, Hogan Lovells
Robo-pensions: The Digital Revolution
Digital Innovation: Risk v Reward
45
Digital Revolution?
1876 2017onwards
Innovations in communication
First telephone
call
Western Union Telegraph Company establishes its Telex
system in the US
Xerox introduces the Long Distance Xerography – the first modern day
fax machine
First inter-industry EDI standard (covering air, motor, ocean, rail and
some banking applications)
IBM launch the first
smartphone, Simon
Apple release the iPad
1991
The World Wide Web
1962 201019921964 1971 1975
First email sent
1983: Microsoft Word launched
2007: Apple launch the iPhone
1981: IBM PC launched
1993
Birth of 2G, first SMS text messages
sent & data services begin to appear on
phones
1999: Blackberry launch first device
1982
TCP/IP emerges as the standard
protocol for the internet
The internet ageThe beginning The mobile era
Hogan Lovells
Digital innovation
Risk
Leading edge or bleeding
edge
Technology risk
Staying on the right side
of law & regulation
Failure
Cost
Reward
Efficiencies & cost
savings
Customer engagement
Competitive advantage
New products,
channels & partners
Brand value
Hogan Lovells
Leading edge or bleeding edge
Ludwig von Mises
“Innovation is the whim of an elite before it becomes a need of the public.”
Is the market ready?
Are your customers
ready?
Reputational impact
Law and regulation
cannot keep up with new technology?
Data and privacy
Regulator focus
Immune to regulation?
Fairness, transparency,
anti-discrimination
Law and regulation
Hogan Lovells
• Robo-advice and FAMR - advice v guidance
• GDPR and complex value chains
Law and regulation
Scheme administrators
Advisers / EBCs
Trustees Employers
Pension providers
NEST
Service providers (e.g.
payroll, platforms,
data services)
Hogan Lovells
Risk depends on the technology and how
you implement itTransition risk Risk appetite
What are the risks? Am I taking on more
risk?How can I manage the
risk?How can I mitigate
the risk?
Importance of governance
Technology risk
Hogan Lovells
• Is the goal to make up lost ground or carve a new path?
• Incumbent v start-up mentality
– Culture
– Priorities
– Cost
Risk of failure
Gary Hamel
“Most companies don’t have the luxury of focusing exclusively on innovation. They have to innovate while stamping out zillions of widgets or processing billions of transactions.”
Hogan Lovells
Promise of efficiencies and cost savings
• True innovation or just digitising the offline world?
• Can these best be achieved alone or through collaboration?
– Data standards
– Technical standards (e.g. Open Banking and open APIs)
What is Open Banking?
APIs (Application Programming
Interface)
Payment Initiation Service
Provider ('PISP')
Account information
Service Provider ('AISP')
Hogan Lovells
Customer engagement
Cuvva
Trōv
• Potential to improve engagement
Hogan Lovells
New channels
New products
New customers
New partnerships
New horizons and competitive advantage
Brand value
Reputation
“Innovation distinguishes between a leader and a follower.”
Steve Jobs Loyalty
Publicity
Hogan Lovells
The risk of doing nothing
Theodore Levitt
“Creativity is thinking up new things. Innovation is doing new things.”
• Nothing improves
• If you don't do it, someone else might:
– Competitors
– Disruptors
– Regulators and law makers
"Hogan Lovells" or the "firm" is an international legal practice that includes Hogan Lovells International LLP, Hogan LovellsUS LLP and their affiliated businesses.
The word “partner” is used to describe a partner or member of Hogan Lovells International LLP, Hogan Lovells US LLP or any of their affiliated entities or any employee or consultant with equivalent standing.. Certain individuals, who are designated
as partners, but who are not members of Hogan Lovells International LLP, do not hold qualifications equivalent to members.
For more information about Hogan Lovells, the partners and their qualifications, see www.hoganlovells.com.
Where case studies are included, results achieved do not guarantee similar outcomes for other clients. Attorney advertising. Images of people may feature current or former lawyers and employees at Hogan Lovells or models not
connected with the firm.
© Hogan Lovells 2017. All rights reserved
www.hoganlovells.com
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Networking reception with wine and canapes
Thank you to
Hogan Lovells International LLP
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Thank You!
TISADakota House
25 Falcon CourtPreston Farm Business Park
STOCKTON-ON-TEESTS18 3TX
www.tisa.uk.com01642 666999
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