A couple of weeks ago, I was having one of those days where everything was going wrong. By early evening I found myself racing uphill in the July heatwave towards a hire car pick-up centre. I was a) already late for my booking and b) in serious danger of not getting there before closing time.
I got there just in time, having become the embodiment of the word ‘frazzled’; barely coherent as I thanked them for still letting me pick up the car. I explained I had repeatedly tried to call ahead but couldn’t get through.
I was so flustered that, despite the luminous highlighter marks showing me where to sign, I managed to miss two signatures from the paperwork, causing yet more delays. A couple of minutes later, mumbling further thanks while trying to leave the office and get out of their way as quickly as possible, I tripped backwards over a coffee table.
I would like to think I am not an objectively stupid person. Going purely by that incident, though, you would be forgiven for doubting whether I would make it off the forecourt in one piece (I did).
We have all been there. We have all done and said silly things at one point or another, or consciously made unwise decisions because of extraneous circumstances, and prayed strangers do not judge us based entirely on those events.
Unfortunately, we are programmed to quickly excuse our own sub-par moments but be deeply critical of those of others.
This got me thinking about the non-advised consumer research published as part of the Financial Conduct Authority’s (FCA’s) Retirement Outcomes Review. We have all seen the quotes demonstrating misunderstandings about how pensions work, indifference to learning about the most appropriate options, and determination to proceed regardless of the consequences.
I have seen some pretty strong reactions to these revelations. A (rather blunt) summary of the general idea is that advisers should not waste time and energy trying to help non-advised consumers who do not trust financial services. The pension freedoms allow them to make their own poor decisions and that is that.
I both agree and disagree with elements of this sentiment. On the one hand, there is only so far we can possibly get with trying to create good outcomes for all consumers, and I wonder where a line will be drawn. Some of the FCA’s suggestions following the Retirement Outcomes Review already seem to be trying to protect consumers from their own legitimate-if-sub-optimal choices, rather than from poor conditions and practices among financial services firms.
The question is: at what stage would the FCA be satisfied the industry was doing everything in its power? What is an acceptable level of poor outcomes resulting solely from the consumers’ choices? It feels like ground on which we need to tread very carefully. Some people do not care and will never care, and that really is their choice.
On the other hand, simply dismissing all consumers who have made a poor pension decision on the basis that it is their own fault feels rather like deciding someone is an unequivocal idiot just because they fell over a table. And, if people come out of such experiences feeling they have been made to feel foolish, it will have a lasting effect and add to the mistrust in financial services that we are always battling against.
Keep an open mind
Consumers know financial decisions such as accessing pensions are important. But they still have to take time out of their lives to engage with the decision. Sometimes the very reason they need to make a decision is because of a pressing issue in their lives.
There are many people who have made a bad decision who will need, want and seek help at a later point.
They will remember then how easy or otherwise it was to access information. They will dig out old paperwork and may be influenced by how user-friendly it was. They will remember how they were treated.
Perhaps it is not in our power to make all consumers care or create a world of perfect outcomes. But we can certainly do more to keep in mind that one poor pension decision is just that: one poor decision.
We must be ready and accessible whenever people are ready to make better ones.
Jessica List is pension technical manager at Curtis Banks Group