Gerard van Olphen calls for a middle ground between advisory services and “execution only”
“It must be possible for employees to receive assistance and coaching from organizations they trust, such as their employer, pension fund, or trade union. Moreover, as a pension fund you want to be able to coach your participants without directly providing them with full-scale financial advice.” These words were recently spoken by APG’s departing CEO Gerard van Olphen at a meeting of the Netspar network for studies on pensions, ageing, and retirement.
Van Olphen: “There are only two flavors. One is ‘execution only’, in which the client has to handle everything independently. The other involves the client paying for advisory services.” This is why he is calling for a “middle ground”, in which a fund can coach a participant “without directly providing full-scale financial advice.” Van Olphen calls the fact that the Netherlands Authority for the Financial Markets (AFM) is giving some thought to alternatives in addition to the two currently available consultancy concepts “a positive development.” The subject of Van Olphen’s lecture was the transition towards a new system – a transition in a sector that he referred to as “relatively traditional.” Van Olphen: “There are considerable social benefits to mandatory participation, such as the virtual elimination of poverty among the elderly, but it also leads to a lack of incentives in the way of innovation and renewal. Innovation will not lead to a growth in participant numbers. Neither will poor performance cause these numbers to dwindle. Growth or shrinkage depends on other factors.”
Nevertheless, the pension sector needs to regain the confidence of participants when introducing the new system, says Van Olphen. “This means that the services offered need to satisfy the expectations of the participants. They are used to the delivery speed of Coolblue and the convenience of Netflix. Furthermore, they expect their fund to keep them informed at relevant moments. And they expect their pension fund or administrator to provide insight into its financial health and to help them make difficult decisions in relation to their pension.”