Speaking at a conference recently on the importance of delivering better outcomes for all, it struck me that our profession is faced with an unavoidable catch 22. Everyone accepts that we need to be engaging with consumers earlier, but, unfortunately, more often than not they engage with financial advice or products (outside of bank accounts, loans and mortgages) too late in the game.
Now before everyone starts jumping up and down about financial education and the curriculum, this isn’t what I’m referring to. Don’t get me wrong, financial education is incredibly important and we should absolutely be teaching young people about the basics of the world of finance: bank accounts, the difference between credit and debit cards and loans to name but a few. But this isn’t what I mean. All things being equal, the good work that has already started on educating school aged children on finances will mean that in a decade or so we will have a generation of young adults entering the workforce who are far more clued up than their predecessors. However, that doesn’t help us today.
We know that the average age of a client on a platform in the UK is 58. We also know that, for the most part, advisers are looking for the next high net worth client – someone with £250,000 or more to invest – and this tends to be people that are older. So how do we begin the conversation with young professionals those in their late twenties or early thirties and get them engaged?
In the wake of the RDR there has been a lot said about direct-to-consumer platforms. For some in the adviser world they have been viewed as the enemy, stealing prospective clients, but as time has moved on I believe we’re moving away from this view. D2C platforms could well be the ‘training academy’ for financial services. D2C platforms could give an introduction to investing, particularly as we move towards combined stocks and shares and cash Isas, before moving on to the fully fledged ranks of professional advice.
As a profession, we need to engage with consumers’ aspirations and start to talk a language they understand and can relate to, it’s not necessarily about products, but what products can do for them. Ours is a profession crying out for a framework through which we can begin to nurture a culture of advice early on in life.
As providers we need to talk to, and more importantly listen to, our customers. What do they want or need more of? What do they want or need less of? The views of our customers need to be shaping what we do. And it’s important to repeat this process, what they need today is going to be different to what they need in one, 10 or 15 years.
It’s not just about communicating with our customers it’s also about the way we do this. Generation X is very much the digital generation, whether that is shopping, banking or booking holidays we’re increasingly living our lives online. Why should interactions with savings and investments products be any different? Digital and mobile capability is going to be a distinguishing factor, which we’ve already seen initial popularity our investment app among our younger clients.
I don’t believe there is a silver bullet or fail safe ‘thing’ that we can all start doing tomorrow, but I do think we need to start talking about the options.
David Thompson is managing director of Axa Elevate