Financial services aimed at the over 55 market is often ‘grey, big, ugly and uninspiring’. Considering that those who are 55 years of age and older, control the vast majority of the world’s wealth and investible assets, they are a market that it would be foolish to ignore.
Many in the over 55 demographic are thinking about retirement. And the concept of retirement, as we know it, is changing. Living longer and healthier lives means not just more time for leisure but, increasingly, a longer (and varied) working life. A hard stop to work, somewhere around 65 years old, is simply not the reality for many people.
According to a recent study conducted by the Royal London (and based on HMRC data) the number of taxpayers aged 65 and over nearly doubled from 3.32 million in 1995 to 1996 to 6.49 million in 2015 to 2016. This means that more than a quarter of taxpaying pensioners are still in paid work. Pensions and later life financial planning play an important role in thinking about retirement (in all its fast-evolving configurations). It requires some serious and consequential decision-making. This is a market that is ripe and ready for an influx of innovative solutions.
Yet they are often ignored by innovators. A fact made clear by players in this market in the article How Fintech Is Disrupting Retirement published by the Warton School of Management last year.
But too often, Silicon Valley is not innovating with the older group in mind. Most of the products designed for 50 and up are “grey, big and they’re ugly and not inspiring,” according to Rhian Horgan, founder and CEO of Kindur, a retirement planning startup. One reason is “anyone over 50 is grouped together,” she said, when digital skills can vary widely between someone who is 50 and a senior at 90. “Baby Boomers know how to use computers and mobile phones but use them very differently than young folks.”
The UK introduced pension reforms in 2015, giving more freedom to consumers with regards to accessing their pensions savings. It was hoped this would act as a catalyst to innovation in the pensions market. The reforms did offer a wide range of potential choices to retirees ranging from how they took their pension income and invested the proceeds. Providing new products and services to large a pool of consumers, potentially flush with pensions cash, should have been an innovators dream.
The reality, however, has not lived up to that hope. The FCA’s interim findings of its review of pension freedoms, published in July of last year, found that there was simply not enough innovation in the retirement income market.
No doubt there are many reasons. There has been a whole host of regulatory initiatives impacting key aspects of provision. In addition, there has not been enough time or effort spent on educating and informing consumers nor for innovative new products to come to the market.
As we age, a wide variety of massive life decisions can have a significant impact on the quality of life in retirement. Decisions that require information and often difficult to wrap one’s head around assumptions about future health and longevity.
There is a complexity to pensions, and retirement overall, that requires a more fulsome approach. As with the non-retired life, a suite of financial products and services is required but in the context of evolving needs and, ultimately, the end of life to consider. Factor in socio-economic and gender differences and the complexity grows. A one size fits all approach simply won’t deliver the best outcomes
Large pools of investible assets, a greater need for personalisation, a need to support complex decision making and knowledge of the technologies that can underpin all of these goals…this is a challenge and opportunity that should be turning heads and minds across our community to the over 55’s. As we convene our community of innovators thinkers and providers, we will look to explore the changing landscape and understanding of ‘retirement’ and kick-start more innovation for this ready-made market.