MLP boss in an interview: “Gen Z has more natural access to the capital markets”

Experts have been warning about pension financing problems for a long time. Without private provision for retirement, things can become tight in old age. The chairman of the financial service provider MLP, Uwe Schroeder-Wildberg, speaks in the podcast “Zero Hour” about Germans’ reluctance to provide for old age.

There’s a lot going on in the markets. Real estate prices are falling, interest rates are rising, and the stock markets are volatile. Is this a good location to invest in private pension provision?

Uwe Schroeder-Wildberg: We are partly dealing with a normalization that was long overdue. We have emerged from a decade of zero or even negative interest rates, an essentially schizophrenic state. However, we are seeing a very rapid reversal, the largest increase in interest rates in over 40 years. In this respect, a certain repositioning is taking place, which is also noticeable in the real estate sector. This situation is certainly not particularly helpful in getting those who have not yet been there onto the capital markets. But that remains an important task.

Why?

Because the capital markets are an important factor in building the necessary savings for retirement.

Is there an understanding developing in Germany that private provision should be made for old age? Is there a new generation of investors coming who will be introduced to the market, including through new apps?

You can certainly see that Generation Z, if you want to call them that, has a somewhat more natural access to the capital markets. The online offers certainly help. But we are a long way from a breakthrough where thinking about retirement planning would be as normal as going to the dentist. It is very difficult for many people at the age of 25 to think about what will happen when they are 65 or 70. This is often postponed. And that’s where we as consultants are still challenged.

What responsibility does your industry have for this situation? In the past, people have worked with push-pull groups and there have been dubious offers. Did this perhaps lead to a bad image and uncertainty?

From today’s perspective, things have certainly happened in the financial services industry that were not good. It is important to professionalize the industry. It requires comprehensive qualifications in order to be able to work successfully for the customer in this sense. And constant training. The job profile must be further shaped so that there are consultations throughout the market that enable customers to make good decisions. We attach great importance to this.

Commissions play an important role in the business, a fact that has long been criticized. There is an assumption that the consultant is not interested in providing the best possible advice, but in receiving a commission from the product provider. A ban on commission is now being discussed in the EU. What do you think of it?

We have made it clear that we are strictly against it. But I would first like to say that we were one of the first in the German market to switch from a commission to a fee-like form in the area of ​​asset management. The customers pay a percentage of the assets, and any kickbacks from fund providers go back to the customers. We introduced this over ten years ago. And it shows, first of all, that we are not dogmatic at all.

But?

The key is to make it clear that commissions are not inherently a bad thing. Due to regulation, the closing costs are now also very transparent. The central question is why fee models in the area of ​​retirement provision and occupational disability have not really become relevant to the market. This is simply due to the willingness of the customers. In this area, they clearly prefer commissions as a form of compensation. As a result, many are not prepared to pay the appropriate fees for the savings process. A ban on commission would have the consequence that advice could no longer take place in this area. The regulator must be aware of this.

Doesn’t the incentive problem still remain?

Once again: The closing costs are transparent, and we fully support that. And we shouldn’t underestimate citizens in general. This is an issue that we are increasingly having in Germany anyway. We constantly think we have to protect everyone from everything. When something is transparent, the customer can decide whether they want it that way or not. But fee-based pricing doesn’t work in this particular market. You have to understand this reality.

The emerging online offers often give the impression that you can actually put together your own private retirement provision quite easily. Why is advice even necessary?

It is important to look at the facts. It’s not like financial apps have played a massive role so far and everyone is suddenly doing everything themselves. The family environment, friends and advice are important for know-how and credibility when making financial decisions. That hasn’t changed that much. The Internet provides a lot of information, but sometimes leaves you at a loss. Advice, when done well, still plays a very important role.

Does that mean there is still a severe lack of knowledge?

You can do the test with your own circle of friends: Who actually knows what their retirement income will be when they retire at 65 or 67? If you ask this question, you will notice that almost no one can assess this well. After the major pension reforms in Germany, the state pension only represents a part of the total retirement income. The question of retirement income is therefore essential, just as important as the state of health. And almost no one can answer this question.

Listen in the new episode of “Zero Hour“

• What Schroeder-Wildberg would advise a young professional starting out
• What he thinks of the federal government’s plans for a stock pension
• Which is why many people underestimate the risk of occupational disability

You can find all episodes directly here RTL+, Apple or Spotify or via Google.