Reponse to the FCA's paper on an ageing population and financial services
21 Sep 2017 - Estimated reading time: 2 minutes
Karen Brolly, Head of Products, Life and Financial Services at Hymans Robertson, commented:
“The financial services industry is only at the very early stages of responding to the needs of an ageing society. Given the oldest old are growing at a faster rate than any other segment of the population, providers are increasingly aware of the fact that they need to take older needs into account when setting up distribution channels and designing new products. But it’s early days.
“One of the biggest financial challenges for the elderly relates to long term care. There’s an urgent need for the Government to be clear on what the State will cover in terms of long term care costs. Understandably, insurers are reluctant to develop products in an unstable policy environment. This lack of clarity is stifling innovation.
“Individuals are also underestimating their potential care needs in old age. Baby Boomers and Generation X are not facing up to the reality that they may need to live in residential care as they get older. Only 3% of Baby Boomers and Generation X are expecting to live in residential care in older age, despite the fact that almost 15% of those aged 85 and over currently do. And it’s highly likely this will rise with increases in life expectancy. Our research shows that while individuals understand the high costs of residential care, at the moment they just don’t think they’ll need it and are simply not saving for it. But as the social care crisis worsens, this could change. It would be great if the government could give the clarity the insurance industry needs to be able to better support individuals in meeting their long term care costs.”
Richard Purcell, Technology and Innovation Lead, Life and Financial Services at Hymans Robertson, commenting on the issues older consumers face accessing financial products through distribution channels that use new technology, said:
“This is a serious issue for financial exclusion as firms rapidly advance towards using technology to distribute products and services, often without alternative access or only offering the best rates and benefits online. The paper suggests providing support for older people in using these channels, but our research has shown that there is a big hurdle for financial services firms to overcome. Over two thirds (69%) of those aged 63-71 said that they would not feel comfortable buying financial products on the internet or using a smartphone and only a fifth (21%) would trust online financial guidance. A lot of work will have to be done by the industry if it really aspires to achieving financial inclusion for older people through new distribution channels."