What is the real power of workplace digital advice?

Roughly 7 million people in the UK have been auto-enrolled according to The Pensions Regulator. Servicing these individuals are around 20,000 financial advisers; numerous guidance tools and platform services.

The average person in the UK is currently reaching retirement with £72,000 of Pension savings (leading to post retirement income of around £11,500pa including the state pension.) This is not the sort of retirement that many of us envisaged.

So, where does that leave us?

The pressures of day to day budgeting remain the focus for people’s finances. The numbers of people accessing high interest debt solutions to make ends meet is increasing and this is only making the problem of under-saving for retirement worse.

Given the lack of advisers and the large number of people looking for help managing their finances, financial advisers are understandably choosing to use their time to service only those with larger amounts to invest. The FCA’s Financial Advice Market Review showed that 67% of advisers had ‘turned away clients’ due to ‘lack of funds’, arguably the very same people who need the most financial help.

A growing population in need

There is a growing population of people relying on educational services and guidance platforms to help them manage their finances. These resources are great if individuals are willing to put the time and effort into learning new skills in financial management however, as many employers who offer this service have found, this is often not the case and services go unused.

It is into this gap that digital advice has landed. Digital advice aims to deliver personalised recommendations on what actions people should take to improve their finances. This is backed up by all the safeguards that come with a regulated service, ensuring employers are adequately protected if they choose to offer these services to employees.

However, the real power of digital financial advice is the reduction in the cost-to-serve. An automated journey with minimal human intervention means financial advisers no longer have to only focus on high earners but can deliver advice to the whole workforce regardless of what they have to invest.

This means those who often need the most help with their finances can finally get it affordably. Services are available that not only give advice on how much people should be saving but are also able to help with issues around debt and budgeting which were previously not covered by advisers.

A rapidly changing landscape

The landscape for workplace financial advice is changing rapidly and it is more affordable and simpler to offer life changing services to employees than ever before.

Digital financial advice is also able to provide data on employees which is invaluable to employers to allow them to better tailor their reward strategy and understand the key issues facing employees. It can also provide crucial insights into future employee behaviour around whether they are on track for retirement and help tackle workforce planning issues before they become a huge burden on a business.

The average person in the U.K need not be on track for an uncomfortable retirement given the tools employers can now give them. However, it is imperative employers wake up to this growing problem and take action today so they don’t leave anyone behind.

Phil Blows is director at Wealth Wizards.

This article was provided by Wealth Wizards.