Benefit counselling can be instrumental in improving retirement outcomes by creating a better understanding of benefits and driving more informed decision-making. However, Katherine Barker, Head of Momentum FundsAtWork, believes that to achieve this, it’s key to look beyond legal compliance to the new Retirement Funds Default Regulations and focus on delivering benefit counselling that has a real, measurable impact.
The Default Regulations require retirement funds to offer members benefit counselling on the fund’s default investment portfolios, default preservation, annuity strategy and any other options available.
The risk is that retirement fund trustees, already reeling from the onerous responsibility of implementing the Default Regulations, may simply do the minimum to comply and ‘tick the box’ when it comes to benefit counselling. Such an approach will undermine the real value benefit counselling can potentially deliver. Barker believes there should be a concerted effort to deliver counselling that is truly effective and empowering.
“As far as member communication and counselling is concerned, there needs to be an increasing focus on understanding the impact of the engagement. We need to ensure the experience is continuously improving and evolving to increase value to member. Things like the level of language used and flexibility when it comes to the platform of choice are of the utmost importance to ensure the engagement has the desired impact,” says Barker.
Financial advisers will play a more pivotal role than ever amidst the myriad of changes the retirement industry faces. According to Barker, benefit counselling services and personalised financial advice are really two critical yet complementary building blocks for empowering members to make better decisions. The counselling service lays a basic foundation of understanding and the financial adviser builds on this with personalised financial advice.
Although 1 March 2019 is the deadline for implementing the default regulation requirements, the FundsAtWork Umbrella Funds already offer a professional telephonic benefit counselling service to members. The service provides the education and information necessary for creating a better understanding of benefits and improving financial literacy. The counsellors help members to understand the FundsAtWork default investment portfolio, default in-fund preservation option, default annuity strategy and any other benefits and options available to members.
The telephonic counselling service will be supplemented in the near future with a series of educational benefit conferences for FundsAtWork members. The service also complements a suite of existing smart services designed to empower members to make smart choices at key decision-points.
Barker says that these services have been well-researched and carefully-designed to have a real impact on members’ behaviour and choices. Members can choose to access the service through a range of different channels. All engagement and communication uses easy-to-understand, jargon-free language to demystify complex information so that members are educated and empowered to make informed decisions.
Barker concludes, “The potent combination of an effective benefit counselling service and professional financial advice will drive better-informed member decision-making and, in doing so, improve retirement outcomes.”