Rob McMurrich: Are pension saving innovations really distractions?

Rob McMurrich looks at three eye-catching pension saving innovations and asks if these 'hares' are overtaking the 'tortoise' policy of auto-enrolment and more traditional products...

Rob McMurrich looks at three eye-catching pension saving innovations and asks if these ‘hares’ are overtaking the ‘tortoise’ policy of auto-enrolment and more traditional products…

Despite a raft of reports, dozens of consultations and some significant changes to the pensions landscape, our clients are still being told they are not saving enough for retirement.

No-one is expecting a silver bullet that’s going to make this all magically come good – certainly not quickly anyway. So, are we sitting back and just waiting to see if it all works out in the end or have some recent trends in the market helped our clients to up our game and reinvent how they can save for retirement?

While traditional pension products, and auto-enrolment, might be acting as the dependable tortoise in the background of the race to adequate saving, there are also some eye-catching hares that appear to be racing ahead.

Are they really game-changing or are they a distraction that’s diverting our clients from proper long-term planning?


There have been a number of fintech start-ups that have launched investment platforms for clients. From the micro-investing apps that round-up purchases and save the difference, and the investing apps that allow clients to set up a practice portfolio before taking the plunge with real money, to those that act as an online wealth manager with investment decision made by an in-house team, they often have no, or low, cost entry points.

These apps can help our clients track, monitor and top-up their savings easily and quickly, often without feeling like they are sacrificing something else. And they do it in a way that perhaps feels more exciting and engaging than traditional ways of investing.

Jason Green, from F&TRC, commented; “Such apps/methods are changing the way in which consumers think about saving. Traditionally it has always been seen that savings need to be ‘large and regular’ amounts, however, this is no longer the case. Smart technology and open banking practices being deployed by personal finance tools are allowing consumers to make savings ‘little and often’ which means that people are able to save when don’t think they can, and without the burden of a long-term commitment.”

But while money apps may provide ease of use and valuable engagement in a saving habit, the money needs to be invested in the appropriate way, and in the appropriate amounts, to have a chance of decent growth.

Steve Andrews from Focus Solutions, the adviser software provider, said: “New technology has the ability to provide essential savings and investment services to many more people, in an informative, engaging and more affordable way. Traditional advisory firms can embed these technologies into their propositions, enhancing their existing services and to open up services to a wider customer base.”

Digital asset investing

Over the last decade, low interest rates have driven people to seek more extreme measures when looking to invest. And social media has given clients more access to the latest eye-catching fads and trends. All this has led to increasing interest in less traditional investing.

Dazzled by reading about 1000% returns, and believing it’s easy to achieve, investing in crypto-currency now sits alongside the likes of wine and art in the category of non-traditional investments.

Sure, your client might get lucky. But, particularly at the moment that, potentially, is all it is.

People of all generations say they don’t trust pensions as they remember the headlines when things went wrong. Yet in those situations, there was likely some recourse as a retail investor. In an unregulated world, crypto-currency has no such protection/fall-back position, and the risks can far outweigh the potential gains.

There’s nothing wrong with clients having a dabble in crypto-currency, but with a small amount of capital that they can afford to, and be willing to, lose. But it shouldn’t be part of a real retirement plan.

Healthy Saving

The Holy Grail of retirement is the combination of having enough money to stop work, maintaining your standard of living, and having the good health to fully enjoy it.

That has created a new trend of ‘healthy’ saving – a way of saving and investing that financially rewards keeping fit and healthy during your client’s working (and saving) life to reap the benefits in retirement.

Vitality Invest, for example, believes successful long-term financial planning relies on both health and wealth, and therefore offers a range of incentives and financial ‘boosters’ that encourage clients to save sooner, invest for longer and look after their health. This could well be a game-changer for many.

So where does this leave us?

You could argue that anything that positively influences our clients’ relationship with saving is a good thing. And a pension is by no means the only way to save for retirement.

But, as with most things in life, there is a balance to be struck between short, medium and long-term outcomes and choosing the appropriate investable assets to meet these objectives.

And while our clients search for the right combination of approaches that will take them over the finish line, education is, ultimately, going to be the key to avoiding catastrophic mistakes in the early years of investing which can shape their decision-making process for the rest of their lives.

Rob McMurrich is head of investment and pensions at Roxburgh Financial Management