Gillian Lofts. Generic guidance critical for industry and consumers Update on TSIP initiative. Guidance Deconstructed for life, not just at retirement

Transcription

1 @uktisa Gillian Lofts EY #SummitPC15 Generic guidance critical for industry and consumers Update on TSIP initiative Draft for discussion 1

2 Low levels of financial capability and savings in UK population UK population by savings balance % 3% 2% Millennials: who do you approach first for financial advice? 2 UK Population % % No Savings 30% k 16% 2.5k- 10k 10k- 50k 65% of UK population p have a savings balance of 2,500 or less 50k - 100k 100k + 52% Parents 23% Bank 60% of millennials in the UK: I don t know how a pension work 14% Financial Adviser 9% Friends 2% Others Page 30 Source: 1. CACI, 2.BNY Mellon: The Generation Game Improving financial capability and savings requires a change in consumer behaviour Research by the Institute for Fiscal Studies points towards the trend of successive generations being increasingly prosperous now going into reverse 2 50% of people don t actively manage their spending and saving and 1 in 6 struggles to identify the balance on a bank statement 1 A big challenge facing our nation is the lack of understanding around the need to save and how to manage personal finances. The average value of a pension pot at retirement is currently 30k 3 and provides an annual income of 1,500, Page 31 Source: 1. Money Advice Service Financial Capability Strategy 2014, 2. IFS, The Economic Circumstances of Cohorts Born Between the 1940 s and 1970 s December Association of British Insurers 2

3 TSIP Working Group What is the industry doing to improve financial capability and savings? The Savings and Investments Policy project ( TSIP ) mission: create policy proposals help to increase the level of savings amongst UK consumers 50 pan industry firms: Building societies, banks, asset management, insurance, platforms, financial advice, administrators, trade bodies and consumer groups Working collaboratively and impartially with the public s best interest 1 Digital Passport 2 Financial Education 3 Financial Guidance Page 33 3

4 What is the Guidance working group? Guidance Working Group Guidance Principles Marketingg Customer Segments Scope Measuring Success Customer Journeys Access Help make consumers make better financial i decisions i through h financial i guidance Page 34 Who is the generic guidance targeting? Objective Help make consumers make better financial decisions through financial guidance Over arching scope UK Public Low income families Manage debt payments so doesn t become problem debt Financial Guidance Young consumers Established Families Achieving smaller Achieving clear savings goals e.g. future ambitions e.g. holiday with friends, home ownership computer All major asset classes Financial Guidance Empty nester households Build up retirement savings Page 35 4

5 How are we proposing to deliver generic guidance? 1 Guidance Principles 2 Definition and Language g 4 Consumer Journeys 3 Common guidance tools 5 Trust Rebuilding and signifying trust- Promoting FairLife 6 segments What Page Access MAS integration Marketing to right customer Measuring Success does success look like? Conclusion 5

6 Conclusion Certain segments can afford to pay for advice Those with the least financial capability need the most support Trapped generation X struggling to build savings Education and guidance is needed to support income generating population to secure financial security Industry needs to partner with the government and not for profit segment in this endeavour Moral obligation for the industry to provide guidance ` Page 38 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC and is a member firm of Ernst & Young Global Limited. Ernst & Young LLP, 1 More London Place, London, SE1 2AF Ernst & Young LLP. Published in the UK. All Rights Reserved. ED NONE (UK) 12/13. Creative Services Group. In line with EY s commitment to minimise its impact on the environment, this document has been printed on paper with a high recycled content. ey.com/uk 6