Regulation is 20 years old this year and those of us who gave financial advice before then will testify that it has done more good than harm. A sad side-effect of making things fairer for consumers, rather than more profitable for sellers, is that advised sales have been moved out of the daily path of the man in the street. As many advised sales were not much good, that is fair enough, but the truth seems to be that unless someone actually sells, then credit is the only financial services product the man in the street buys lots of.
As it seems that a savings product that makes a face-to-face seller a quick profit will never again be thought ethical, there is no likely route back into the mass market for this tribe. It is the marketeers that have to do the job in the 21st Century and no one has worked out how to really get ordinary people to buy what is good for them financially without being pushed into it. That is probably because although the man in the street is a mug when it comes to financial planning – he does not do it like he should – he is not a mug when it comes to a deal. He knows that buying this stuff without proper advice is bound to fail. Regulation has exposed that truth to all.
Trouble is, when did you last hear of an adviser looking to profit from the mass market? All seem to desire to deal with the better off. Yet the truth is that many of the world’s greatest businesses are based on trying to give good deals to those who have to watch budgets closely. This is almost all of us and, if you can sell your wares (and our ware is advice) to almost all of us successfully, you make far more of a fortune than if you just sell to the richest of us.
Which is why the decision of one of the world’s biggest businesses to try advising the mass market is a very interesting one.
Wal-Mart, through Asda and Lifesearch, is going to see if marketing advice itself can get the man in the street to buy protection products (initially) in a volume that non-advised marketing could not.
It is an interesting communications challenge all right, particularly as life insurance is the only brand of protection the consumer seems to relate to and the state keeps pretending that it can look after those whose finances are destroyed by tragedy.
However, it might just be that a brand trusted by mums to feed their children safely might just be trusted to answer tricky questions like how best to protect the little darlings too.
One truth encourages me. Selling protection products off the shelf is not working. It is not closing gaps. The man in the street sees it as cheap, not good value.
One truth discourages me. There is no problem that lawyers and legislators cannot make worse and these well-meaning folk seem to feel that their attentions are urgently needed in advised financial services but not in non-advised sales. How wrong they are.
But whether or not they persist, let us hope Asda’s initiative works because, if it does, then other super-brands will start to advise too and in no time advice will be the norm again in the whole market.
Not 20th Century expensive face-to-face Man from the Pru advice but 21st Century phone and web-based advice – cheaply delivered, closely controlled and customer, not seller, focused.
Tom Baigrie (info@baigrie davies.co.uk) is managing director at Lifesearch.