By guest blogger Karen Barrett
Working in financial services most of us are aware of the gaps – protection, retirement, savings and insurance. Gaps that mean for the majority of people they are storing up trouble for the future. Ask most consumers and hardly any would be aware of what it means for them, their life plans and their future. As a recent BBC Panorama documentary illustrated, very few families earning the national average household wage of £40k were making provision for their financial security either now in the form of protection or for the future via long term savings.
Recent research findings of ours showed that UK adults are putting their financial security at risk, with 30% of consumers uninsured in vital areas such as life insurance, income protection, critical illness and mortgage payment protection. Furthermore, a growing number of consumers are now decreasing their insurance policies, with 8% cutting back on important insurance areas in the past 12 months.
The squeeze on consumers is still not beginning to ease as families face the biggest fall in their spending power in more than a year. Consumers’ spending power deteriorated further last month to the lowest level since February 2011, meaning, according to the Lloyds TSB Spending Power Report, each adult has £113 less per year to spend (after inflation) on non-essential items compared to a year earlier.
While there has been and continues to be much debate on this subject within the industry, there is still not enough discussion at a consumer level. It’s a given that the government needs to create a stable environment in which businesses and consumers can plan ahead for the long term. Also, that this needs to be made a priority right now so that other organisations can follow suit. However it seems to me that the tide is now turning and more people realise they need to take responsibility for their own future financial security, so I expect to see engagement with the consumer grow – from government, government agencies, product providers, advisers and consumer bodies. The opportunity for the industry to get this right is up for grabs and I know I’m not the only one passionate about doing right by the consumer.
I struggle to find a parallel in any other industry where advertising and marketing spend is focused on how to get compensation and redress. I believe the FSCS campaign to make people aware of the compensation scheme was not the way to build trust and encourage consumers to take up the mantle of their own financial responsibility. Misselling scandals and negative press have not done much for the cause either.
There needs to be a more positive approach across the whole of our industry. Most importantly those working hard to better the industry need to shout loud and clear about their work in the consumer media where we can shape attitudes instead of keeping the debate confined to industry publications and forums. As a marketer working in financial services I know there is much to learn from the way other industries handle challenges such as consumer awareness and reputation management.
Now I feel there is a drive for society as a whole to make things better for people. Companies are increasingly focused on treating their customers better and thinking about the long term, rather than short term gain. In part this is due to many people today having a better awareness of the future, and in part due to the advances of technology which eases consumer access to information. No longer can companies hide less than stellar customer services or less than fair financial products. Consumers are now well practised in turning to the web to find others’ experiences before rewarding companies with their own custom.
At an adviser event I attended last week, every single adviser there was proud of the service they offer to clients and felt passionate about helping them achieve their aims and goals. Feedback from their clients supported this view. Providers who support our marketing and PR campaign to promote advice to consumers have been telling me of various customer focused initiatives within their organisations. Those tasked by government with providing financial education and information to the masses seem to finally be heading in the right direction.
For our part, our soon to launch Value of Advice campaign will look to demonstrate what we believe is the most important issue the advice industry is facing now and will increasingly face post RDR – proving the value of independent financial advice. We’ll be using the media to showcase how consumers benefit from taking financial advice, aiming to bust the myths around paying for advice, talking about the accessibility of quality advice and the advice process.
The support for this consumer facing campaign to date has been impressive with advisers, industry and the consumer media all backing the work we are doing to show how advice can help people feel more confident about their personal finances. We know the media are more than happy to bring this sort of campaign to their audiences and we have already achieved seven wonderfully positive pieces in the national media prior to official launch. I think this demonstrates a willingness to write up the good news stories from our industry.
It’s up to all of us working in the industry to keep this momentum going, and really make a difference through the services and products we provide to the man and woman on the street. If we can all keep the end user front of mind, like so many of the advisers I met last week, I am confident the future will be bright.
The thoughts and opinions in the guest blogs belong to the authors and do not necessarily represent the views of Roger Edwards or Bright Grey/ Scottish Provident.
Over to you: Do you agree with Karen that while consumers are becoming more aware of the need to take responsibility for their own financial security, there is still not enough discussion on the subject, and not enough marketing financial products to consumers at a consumer level? Please leave a comment below.