The grass may look greener, but there are snakes in it. Pension Freedoms are encouraging lots of people in DB schemes to consider their options before accepting the income for life they originally signed up for. And as several big schemes face difficult times and terrible headlines, many members who are nowhere near retiring, are looking over the hedge to the apparently greener pastures of DC.
These members are often enticed by ‘advisers’ who promise them a wealthier retirement than their DB scheme ever could. Some of these advisers give good advice, others don’t. And a third group are robbing people of their future. Trustees, the Government, Regulators, and the media are all pointing fingers at each other while painting a gruesome picture of this third group: the scammers. But if these people can get members to trust them, even hand over their old age to them, perhaps we can learn something from them about how we look after our members.
Scammers don’t have swag bags or stripy jumpers.
We need to stop thinking of scammers as Del Boy figures, operating from dimly-lit offices over chip shops. They’re more like Richard Branson. Not only are they plausible and articulate, but, like Branson, they make members feel that they’re on their side, battling against big corporations that only have their own interests at heart. When Virgin Atlantic went into competition with BA, Branson told us that the established airlines had been making too much money from their near monopolies for far too long; charging us for poor service and a dull experience. He wanted to make life better for us. I don’t know whether he was right or not, but we bought it. Pension scammers do the same. They persuade members that, unlike the big faceless institution that’s running their pension scheme for their own benefit, they’re able to use their entrepreneurial skills and inside knowledge to offer something tailored to the individual member that will free them from the machine. And, just like Virgin Atlantic, scammers deliver a great customer experience. They pro-actively phone members, they meet them face-to-face, they get answers to questions almost instantly, they even invite people to chicken dinners! It’s true; steelworkers were invited to a chicken dinner and a presentation about transferring out. Meanwhile, we think members should be grateful. We have admin backlogs – “because we’re getting so many transfer requests right now,” which tells the member they’re not the only person thinking of transferring out. Our help desks are unavailable because of the number of questions we’re getting. And we’re strictly neutral: “We can give you information, but we can’t advise you what’s best.” Well, hey, if you can’t, there’s a scammer down the road who can.
Be braver when it comes to helping people
I come across two broad types of Trustee: those who want to get as close to giving advice as they can, and those who don’t want to be on the same continent as advice. Whilst no trustee wants to cross the line, perhaps it’s time we had a good hard look at ourselves and moved at least a little out of our comfort zone. Is it enough to give people a bland warning, tell them they need an adviser, and point them to someone else’s website? We rarely even mention that most advisers aren’t authorised to help them. We don’t usually provide a list of advisers who are. Few schemes offer to pay for advice. We don’t even say that the FCA can help members if they just give them a call: “here’s their number and here are a few things you might want to talk to an adviser about when you meet them.” If we started helping people think about transferring out, rather than warning them against it, we’d avoid looking like we’re acting in our own interest, a criticism often thrown at us by scammers.
3 ways to keep members away from the scammers
Stop looking like we’re trying to hold on to people’s money
A few years ago, I worked with a large financial company (name withheld to protect the innocent). They were concerned because, following poor returns, loads of people were taking their money out of an investment bond. And they were doing it at a time that meant penalties and charges were high. Waiting just a few months was likely to result in a better outcome for everyone. If you rang the company and told them you wanted your money, you were put through to the ‘Retention Team’. In other words, a group of people whose job is to stop you doing the thing you want to do, with your own money.
By changing the team’s name and objective from ‘retain money’ to ‘help people take out their money in the best way for them’, the whole relationship changed. When the company clearly wanted to give people their money, they were happy to chat about the best way of getting it out. As a result, once people understood their options, many decided to leave it where it was.
The company retained millions of pounds of investment they expected to lose. And investors avoided hundreds of pounds in early exit charges. Everyone won.
So, perhaps we should present transferring out as a genuine option. Maybe we should help people find advice and think it through. This way we keep the relationship with our member, rather than handing it over to the scammers.
When we try to scare people about transferring out, we’re playing into the scammers’ hands.
They’ll tell members that we’re scaring them because we want to keep hold of their money. They’ll make us the member’s enemy.
Think like a newsroom
I’ve monitored some scammers’ marketing for a while now and they move really quickly. Their newsletters, websites and social media platforms respond instantly to news and are updated hourly, even every minute. Meanwhile, we spend weeks preparing a newsletter. I spent three months last year getting a Trustee to sign off the script for a two-minute animation. Concurrently, the scammers set up websites using the scheme’s colours, imagery and font, and invited people to a meeting to discuss their personal finances.
We need to think like a newsroom: making our websites and social media platforms the go-to place for the latest information, not a repository for forms and last year’s report and accounts. Moving quickly means taking some risk but, as we tell our members, investing in the future isn’t about avoiding all risk, it’s about finding the right balance between risk and potential reward. Well, that’s as true of communicating as it is of investing. To make things move quickly, whilst also spreading the risk of speed, try shortening the sign-off chains; does the whole board of trustees need to sign off every email?
Build relationships; don’t just tell people stuff
All of this is about building stronger relationships with our members, because relationships trump truth. People trust rubbish data from someone they like more than they trust good data from someone they don’t know. I asked some members of a scheme earlier this year who their Trustee was and what they did. They thought they worked for the scheme’s investment firm. If members don’t know the people running their scheme, what those people have to say to members matters very little. Scammers talk to people all the time. They put their face on the top of documents and their names on the bottom. They don’t send letters out from ‘the Board’.
It’s time to build relationships with members so that when they’re thinking through tricky decisions, we’re the first people they think of.