April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 1

It’s the consumer, stupid!26 January 2012

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 2

It’s the consumer, stupid!

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 3

It’s the consumer, stupid!

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 4

It’s the consumer, stupid!

1. Market is dysfunctional2. Biggest issues3. How we might tackle them

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 5

It’s the consumer, stupid!

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 6

DC shouldn’t be this hard

Only 4 questions

1.Should I join?2.Where do I invest?3.How much should I save?4.How (and when) do I take my benefits?

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 7

DC shouldn’t be this hard – however,

• Critical• Complex• Urgent• Irreversible

At retirement choices are:

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 8

Retirement – how it used to be

18 65 75 One job Risk with employer No choices Retirement – a single event

Saving Income

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 9

Retirement – how it is now

10+ jobs Risk with consumer Many choices Retirement – a process

De-risking glide path is part of ‘new’ retirement

18 65 7555 85

Annuity 2

Annuity 1

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 10

Dislocation between accumulation and decumulation

• Inert• Financially illiterate• Disengaged• Low wealth• 80% of the market

• Proactive• Sophisticated• Engaged• Wealthy• 20% of the market

Typical individual is expected to be:

Saving Income

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 11

How do we overcome these issues?

On the road to retirement:

1. It’s not two products – it’s one2. Getting the glide path right

(for different groups)3. Make sure SRDs are sensible4. Aggregate small pots

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 12

The big question – what’s everyone else doing?

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 13

Context

Expected income Contributions

Investment return

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 14

There’s no point getting the glide path right……….

Men Women

….. If you’re aiming for the wrong destination.

Selected retirement ages

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 15

Small pots

• £5,276 median ‘pot’• 58% ‘dormant’• 80% still ‘dormant’ 3

years later• Aggregation vital

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 16

How do we overcome these issues?

1. Smarter defaults2. Educate3. Advise4. Steer

At retirement:

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 17

What attributes of products do consumers like?

• Simple to use and to understand• Reliable and predictable• Guaranteed• Durable - one off decision (fix and forget)

• Sounds like an annuity to me

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 18

Just buy this one!

“We looked at 137,787 TV reviews: this is

the best TV under £650.”

April 14, 2023 Copyright © DCisions Limited 2011, All Rights Reserved. Patent No. 7,844,527. 19

It’s the consumer, stupid!26 January 2012