Project Hot Wheels and the quiet consolidation
28 Sep 2017 - Estimated reading time: 2 minutes
It’s birthday time in our house soon – our smallest boy will shortly be turning 6, which means that there’ll be a whole load of new “stuff” landing. Anyone with small people in their lives will understand how they go through mild obsessions, be it dinosaurs, the colour orange (particularly challenging as everything in his life had to be orange) or Toy Story (which I found mildly enjoyable). For now, it’s all about Hot Wheels toy cars and we have at least three of every model ever produced, in every colour imaginable.
So, in anticipation of The Birthday, I’ve spent most of my weekend covertly directing small vehicles to the charity bag. The stealth approach may appear harsh, but it’s fair in anticipation of the new, shiny stuff The Birthday will bring. And he won’t notice if he has a few less of those that look the same.
Back to the world of pensions and my day job is still very much about Master Trusts. And in the midst of project Hot Wheels, my mind started to drift back to when we first heard about The Pension Regulator’s plans to tighten Master Trust regulation. It was very welcome news and I remember that there was a fair amount of commentary around market consolidation, whether or not they’d be a mad dash to get out. We’ve clearly not seen that so far and, on the surface, very little appears to be happening.
But actually, if you scratch the surface a little and dig a bit deeper you’ll see pockets of consolidation. I was chatting about it with someone recently and I described it as quiet consolidation – it’s happening behind the scenes. It’s those smaller providers who may have failed to make significant inroads, or perhaps those who don’t have the appetite to comply with the tighter TPR regulations, and are deciding to throw in the towel. So far, it’s been more of a steady trickle rather than a massive swathe of loud market exits, although I expect that we’ll see more activity as April 2018 draws closer. It’s been controlled and measured so far, which is exactly how it should be.
It’s really important that we avoid chaotic market exits which would dilute confidence in the Master Trust brand, but most of all, we should ensure that individuals are protected.
In terms of propositions, there’s a lot of vanilla and I think there’s a need for a different flavour. And with the Hot Wheels situation in mind, there’s a lot of the same out there and we don’t need lots of the same. We always cite innovation and vision as being key and that innovation should be a constant, forming part of a business as usual approach.
We also talk about the large numbers of providers in the market, but (perhaps perversely) there’s still opportunity for new entrants – disruptors and pioneers with a well thought out road map, an understanding of exactly who their customer is and a clear focus on meeting their needs. And all the better if they’re not at the mercy of a legacy that makes them less agile.
The Master Trust market is constantly evolving, albeit quietly right now, but I’d expect a bit more noise and change as we head into 2018. It’s critical for employers and trustees considering a Master Trust to carefully consider who their most suitable provider partner may be. Getting the right support and advice is paramount to success and good member outcomes – it’s important that the advice is truly independent and without conflict, that it considers the whole of the market and is backed by a track record of experience and expertise.
In the meantime, while the world of Master Trusts continues to evolve, so does our smallest boy’s taste in toys. So back to more pressing matters - project Hot Wheels and surviving the party for 20 on Saturday afternoon. Pray for me......