Although we may not like to admit it, it is hard to argue with the suggestion that collectively the pensions industry, regulators and politicians have failed the British public over the last 30 years. Certainly successive governments of any political persuasion have been guilty of seriously undermining retirement provision – the Tories with their excessive encouragement of “contribution holidays” for employers in the 80s, and Gordon Brown’s infamous raid on ACT to give but two examples.
Equally a succession of “mis-selling” scandals – which in reality highlight a serious lack of knowledge both in the industry and regulators – add up to a situation where the vast majority of the British public has little if any confidence in the pensions industry.
All too often industry leaders talk of the public’s failure to understand. But in reality is it not time to recognise that we don’t understand the public? Whilst it’s easy to blame everybody else I believe it is time for our industry to recognise the extent to which we’ve failed to win over the hearts, minds and wallets of the public and come up with new strategies to encourage consumers to embrace saving.
Whilst I am one myself, I have to confess to being more than a little jaded at hearing white men in their 50s talking about the ways in which they expect younger consumers particularly and members of the public generally to want to consume financial products. Uncomfortable though the message may be, is it not time to learn that increasing numbers of consumers are not made in the image, or with the values of, those who work in the financial services industry.
Against this background I found the recent paper from Friends Life Pensions: ’The Solutions’ under their ’Visions of Britain 2020’ a breath of fresh air. Produced by the Future Foundation it explored a range of alternative approaches to encouraging pension savings. The document provides substantial evidence of the extent to which consumers generally and the young in particular are prepared to think and act differently.
For example nearly 50 per cent of those questioned under 35 were attracted to the prospect of making payments to their pension via ATMs. When this issue was raised on industry blogs immediately after publication of the report several respondents dismissed this suggestion with derision. If as an industry we don’t want to hear the messages our customers are trying to tell us is it any surprise they don’t see us as a savings solution?
It is noticeable from the Friends Life report that many of the savings mechanisms that were favoured by younger respondents were far less popular amongst those over 65, but if we’re trying to encourage the working population to save who should we listen to? Those now in receipt of pension benefits or those we need to encourage to save for them?
Whilst the UK financial services industry is caught in a state of RDR paralysis the rest of the world is building new exciting solutions to encourage consumers to save for their future.
All too often industry leaders talk of the public’s failure to understand. But in reality is it not time to recognise that we don’t understand the public?
If we allow ourselves to become so fixated on the immediate future that we failed to recognise what is going on in the wider world this industry runs a real risk of precipitating its own obsolescence. As the Friends Life report amply demonstrates 21st-century consumers think very differently to those who grew up in the 1980s.
While it is essential to prepare for RDR, in my view it is equally essential to be preparing for 2014, 2015 and beyond. Because of the regulatory hiatus caused by RDR the extent of true innovation in UK industry is seriously constrained, this is not the case elsewhere in the world where an increasing number of innovative solutions are being developed.
Given the way in which our industry has so clearly failed to capture the imagination of consumers over the last two decades, I’m convinced the time for fresh and innovative approaches is now. To me this makes it essential to put our old ways of thinking behind us. Around the world companies are building new ways to engage with consumers. The companies that will dominate the 2020s will be those who are now looking beyond 2013 and recognising the need to fundamentally change the way they engage with customers.
Anyone using RDR as an excuse to avoid starting a process to fundamentally change their businesses before the middle of this decade will not have to worry about 2020, they will have gone out of business long before.