Build more trust in your business
And help build trust in your industry
If you manage (or run the marketing for) a financial services business – offering advice, financial products or both – then this Insight is for you.
If you’re a customer of financial services – you might find it interesting too 😊
Houston, we have a problem
We all know that to build a good financial plan, we need to:
- Clarify our financial life goals – the things we want (that cost money) for ourselves and our loved ones in the future.
- Check if we’re on track to achieve those goals…
and if we fall short…
- Take the necessary actions to get ourselves on track.
Or, if that’s not possible:
- Adjust: defer or scale back our goals – to get on a new track.
I start here because this is also, surely, the best way to approach building a plan for a business or, indeed, a whole industry?
Yet, despite the best efforts of many, the Financial Services (FS) industry remains where it’s been for years – at the bottom of the performance tables for consumer trust – see here.
FS was also at the bottom of this table in 2014, 2013 and 2012 (with a score of 43)
Now, you may notice that the scores have increased over recent years but we’d be complacent to think that everything is fine now.
First, you’ll see that the scores have gone up in all the other sectors too.
Second, whilst the improved scores are hopefully, in part, due to improved products and services, it’s likely that they’ve also been boosted by rising values on investment assets.
Investors complain less about their investment and pension plans (and their adviser) after their plan values have gone up for several years in a row. So, some of those increased trust levels could evaporate when markets take a big fall – as they always do from time to time.
UK trust scores are lower than average
The Edelman Trust Barometer is a valuable (and free) resource – and gets more interesting the further you dig it into it.
For example, as we see here, the UK performs worse than the Global average for trust in Financial Services – and worse than most of the largest economies too.
And the UK’s position is worse when we narrow the search from broad ‘Financial Services’ to ‘Financial Advisory/Asset Management’ services.
I’m really not sure what’s going on in Germany. Their trust score is even lower than that for Russia – and that’s extraordinary for Germany, a country that prides itself on excellence. We know (from the RAND ‘Cross country comparison of financial advice markets) that very few (c12%) Germans invest or stocks or bonds. That compares to 22% in the UK and c. 50% in the USA. So, very few Germans have enjoyed the extraordinary rise in asset prices since the global financial crisis. But whether that’s driving their mistrust? I’m not sure.
UK masses are far less trusting than the informed public
However, the big Insight for me in this research is how the levels of trust vary between the informed public and the mass populations within various countries.
Here’s how Edelman defines those groups.
The shocking finding in this report is that by comparison to the world’s largest economies in 2018; USA, China, Japan, Germany and UK…
the UK has the widest gap in trust (in FS) between its ‘informed’ and ‘mass population’ groups.
So, what’s the problem here?
Why does the UK, the so-called home of Financial Services, perform so badly on this trust scale?
And why is there such a large gap between the trust levels of our informed public and that of the masses?
Well, we know that there’s a lot of grossly misleading promotion of various ‘trading’ and ‘investment schemes’ outside of the regulated parts of the FS industry. And this gives the whole industry a bad name.
High yielding (and very high risk) single company corporate bonds are just one of the more prevalent examples at this time.
However, we also know that we’ve had various financial misselling scandals in the past. And that today, small numbers of regulated advisers continue to give the industry a bad name – with poor quality advice and/or excessive charging.
Defined benefit pension transfers are an example in this category.
And this saddens me because I’m a huge fan of the benefits of good quality financial planning. I’ve introduced all my various family members and friends to advisers over the years. And I’m in no doubt that most advisers offer solid advice at a fair price.
That said, I feel the industry needs to recognise its problem with consumer trust and how, in large part, it’s caused by having so few relationships between financial service consumers and good quality, regulated advisers.
Relationships are KEY
We all know that trust is key to building relationships but perhaps we forget that it also works the other way round.
We need to build relationships in order to build trust.
Research into trust in leaders (and, after all, advisers are leaders in one sense) shows that we trust leaders for three reasons:
- They nurture positive relationships – stay close to their people, resolve conflicts and balance the needs of individuals and teams with getting the job done.
- They demonstrate good judgment – based on technical knowledge and experience.
- They are consistent – they walk their talk / do what they say they’ll do.
And the critical point (from that HBR article) is that positive relationships are, by far, the biggest driver of trust in business.
Of course, like a lot of research, this confirms what we’ve known intuitively for a very long time – as this brilliant quote from Teddy Roosevelt shows:
Sadly, this problem is also getting worse because the proportion of the mass public with access to personalised financial advice – is now collapsing.
A report from Canada Life (August 2019) suggests that only one in six (16%) of UK advisers are happy to take on clients with less than £100,000 of investable capital.
In 2014, about half of all advisers; (three times as many as in 2019), were happy to advise such clients.
And, when we think about the sorts of people who have £100,000+ to invest, it’s clear that it’s not just the ‘masses’ in the UK who find it difficult to access good financial advice. A big proportion of the ‘informed public’ is getting turned away too.
Why do so few financial advisers want to work with ordinary investors?
Well, this is a big question. And the answer is driven by many factors but here’s my ‘starter for four’ to kick off that conversation:
- The regulation around FS is too complex and burdensome.
- The UK’s tax rules are too complex and burdensome – especially around pensions as we’ve seen recently with the NHS pensions crisis.
- The ongoing fee-charging model for advice has become the norm – and this incentivises advisers to focus only on wealthier clients and
- There’s a lack of supply of new advisers into the industry – an issue made worse by the poor trust image of the industry as a whole!
Can you help change this?
Absolutely, and I know that no good adviser likes to refuse people access to good quality financial advice – because that only leaves the enquirer vulnerable to bad advice or scammers.
Thankfully, we’re seeing the better, solid (value-based) financial firms finding ways to offer financial information and guidance to the wider public – with the best firms developing high-quality educational programmes – as an integral part of their business proposition.
What’s more, these firms find that by providing these programmes, they also grow their core business.
Perhaps this is an obvious development for the FS market, given that educational materials ‘how to use’ videos are now so embedded in the marketing of most other industries.
As an aside, you could say that ‘Everything is obvious, once you know the answer’ – as Duncan Watts explains in his excellent book of the same title (listed here amongst some of my other favourites) …
…but it takes innovators and fast followers to get a new movement to take off…
However, it’s also true that financial advice is very different from selling physical products. And many financial advisers see education as part of their face to face advice proposition.
So, for some advisers, it doesn’t make obvious sense to offer education for free alongside their normal advice services.
Of course, if you decided to offer an educational programme for your existing or prospective clients, it doesn’t have to be free. You could develop a ‘membership’ area – either as part of your current website or as a separate site – and charge a small subscription for people to access your materials.
You just need to remember to offer some elements of your programme for FREE – whether you charge for the rest or not.
That’s just basic ‘try before you buy’ marketing.
Either way, leading financial advisers and product providers now recognise the significant, trust enhancing, benefits of having education at the heart of their business. Helping people understand how to solve their financial planning challenges is, without question, the best way to start a relationship.
And, whatever the format, you’ll want high-value educational materials – to both grab people’s attention and hold onto it. The digital world is incredibly noisy. So, your messages need to land and stick.
Educational offerings enable you to:
- Help those in the ‘mass’ and ‘informed’ public groups who would value solid financial advice but cannot yet afford your services.
- Help you retain your existing clients with constant reminders of your expertise and commitment to education and wellbeing – inevitably leading to more referral business also.
- Attract new clients for the products and services you already offer – with lessons that emphasise the value of those services.
- Attract new types of client for any new products or services you introduce.
- Demonstrate that you’re playing your part in building a sustainable world.
Quality Education is number four on the UN’s list of goals for a sustainable world.
In short, by offering high-quality educational materials, you can transform your business brand.
Sounds wonderful – and pricey, right?
Well, financial education is wonderful but no, it doesn’t need to be expensive to produce… provided that you approach this the right way – with the right team of people supporting you.
Your time is costly. So, you need to minimise the time you spend on a project of this nature, get it right first time, and build it to last.
You do not want to have to rewrite videos or other materials shortly after you’ve created them – which is, sadly, what’s required with a lot of the material out there.
Yes, these developments cost money. You’re building material of high quality and bespoke to your business.
You’re not using the same set of blandly worded materials that many other Financial Service firms might put out there 😉
So, there’s work to be done: to write, record, edit any videos and design any written guides… and integrate all elements of your educational programme into your online platform – so that they can work for you whilst you rest and play.
But once it’s built, you’ll have transformed your position in the marketplace and, perhaps, most important of all…
Your ongoing costs will be minimal, or nil!
Business (and personal) investments with low or no ongoing costs are very rare. With many products and services, your upfront cost only covers your entrance to the club.
But this kind of investment can be different if you get it right.
You see, my approach to financial education is to focus on the evergreen lessons – that last for life.
These are the fundamental Insights that will inform and guide your audience, regardless of what’s happening; in politics, the economy, the latest budget from the Chancellor or the latest movements in interest rates or the prices of shares or houses.
Evergreen content at the heart of your educational programme is essential. Once your visitors see that it doesn’t go out of date, they value it more highly, keep coming back to revise the lessons and invite their friends to visit too.
There’s really no comparison with all that chitter-chatter online about what Boris Johnson or Prime Minister Jeremy Corbyn, said today.
(Oh yes, didn’t you know) 😉
No fat fees upfront – and no exit fees either
Finally, I should mention that unlike some marketing or writing agencies, I do not charge any large percentage ‘project’ fees upfront on this type of work.
I do charge a small, regular retainer fee but I allow my clients to terminate the contract whenever they like, without additional charge and with any retainer fee credit refunded also.
I don’t know why any good business would try to lock their clients into a service…
(note to self – remind ‘The Times’ of this)
Want to explore this idea?
If you’d like to learn more, I’m happy to share details of what’s involved in delivering first-class educational materials for your business.
And, if you’d like to see examples of the kinds of video scripts and guides I create, just ask me here…
…and, rest assured, my work has been fully tested by others 🙂
Obviously, to work together, we both need to be happy with our initial discussion(s) … but once we are, we can then develop a specific list of lessons for your educational programme – based either on your own ideas or from a substantial menu of lesson ideas I could provide – to kick start our thinking.
And you can be confident of this:
Any lessons we develop would be written in high impact, plain English and aligned to the classic financial planning life stages here.
For an initial conversation – contact me here or via LinkedIn and please bear in mind that with this type of work, I can only help two or three businesses at any one time.
So, if you like the sound of this, let’s talk sooner rather than later
Thanks for dropping in,
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