Hey everyone, I was actually right about something

A whole bunch of disagreeable livestock is gathering around the poor old Money Advice Service.  Exhausted by the savaging it’s taken ever since it was launched – actually, since before it was launched – it’s just lying there on the ground, not really moving, waiting for one of the circling wolves, jackals, hyenas and suchlike to deliver the fatal wound.

And here’s the good bit:  I told you so!  In fact, I told you so repeatedly, on the first occasion even getting in ahead of the first hyenas (or, you might say, actually being the first hyena).  Here’s what I wrote in this blog in February 2009, just before Money Guidance (as it was then called) went on its initial regional test up in the North-West of England:

” I think that no matter how it’s branded, marketed and promoted, the service will always struggle to maintain its focus on what its ultimate sponsors – the Treasury – see as its primary role:- encouraging more young mass market and downmarket people to put more money into long-term savings.  Trouble is, this just isn’t the guidance that most young mass market and downmarket people want to hear.  On the whole, they want and need guidance on day-to-day financial issues, particularly to do with debt.  It is mainly older upmarket people who want advice on savings and investments, especially now when they look with horror at the risks of investment and the hopelessly-low returns on savings.  In between young families panicking about mortgage payments, and retired people panicking about their investment income, I think the guiders will struggle to keep their eye on Alistair Darling’s ball, so to speak.”

And if that wasn’t prescient enough for you, how about this from two years later, when despite the extremely ambiguous results of the pilots it was decided to roll the scheme out nationally anyway:

“The lurking bear-trap in the whole Money Advice concept has always been that it’ll finish up spending a ton of money giving advice on the wrong subjects to the wrong people (especially the latter – the idea is not and has never been to offer free chats, coffee and biscuits to retired pensioners with large amounts of savings and too much time on their hands). The way the protagonist is presented in the commercial seems to me to give the whole project a big shove towards that bear trap.

Much as it grieves me to say so, I think IFAs are actually right to be pretty grumpy about this. The rest of us will have to settle for being mystified – except for a few cynics and sceptics, who may wonder whether, by deliberately recruiting the wrong user profile, those in charge are building a pretext for canning the whole thing in a year or two.”

I’m not sure if the whole Money Advice thing was ever do-able,but it certainly isn’t remotely do-able in the way it’s been done.  That’s a shame, I suppose, but it’s also an extremely telling demonstration – that the very same people whose job it is to tell us how we’re allowed to engage with consumers haven’t got the faintest idea how to do so themselves.

How to rebuild trust in financial services. Not.

Natalie Ceeney, the financial ombudsman, has given a talk on the topic of rebuilding trust in financial services.  She says it’s down to three things:  financial institutions have to deliver what they promise, the deals they offer have to be fair and they have to treat people who complain as an opportunity to learn.

At one level, when we think of her recommendations in the context of good business practice, an expression involving the words “No,” “shit” and “Sherlock” does come to mind.

But of course it’s not quite as simple as that.  Before too long, I suspect the technology will exist to clone Mother Theresa of Calcutta.  And if the entire industry announced that it intended to replace every single employee with replicas of the diminutive Albanian, most consumers would still feel convinced that it was some sort of trick and they’d finish up out of pocket if they dealt with her.

My point, which I must say I’m getting tired of making and fear that you may be getting tired of reading, is that while individual institutions may be able, if they choose, to invest in building trust, the presumption of trust in the industry as a whole has gone in the same way that air goes from a burst balloon, and won’t be coming back.

And nor, in my strongly-held opinion, should it.  Even at the point we’ve now reached, I still think we need a whole lot more caveat emptor, not less.  Distrustful consumers, backed up by an effective ombudsman service, are and will always be the most effective overseers of the industry, and the best way to keep it honest.  I’m surprised, I must say, that the ombudsman is giving tips on how to encourage consumers to lower their defences:  I’d encourage them to do just the opposite.:




Another of those phone-a-friend blogs. (Bet no-one answers.)

Every now and then I write a blog asking a question which I’d really like to know the answer to, but so far I don’t think anyone has ever replied.  Maybe this time.

A billion years ago, I worked on a bunch of Mars confectionery products.  We spent 99% of our energies writing television commercials addressing consumers – “A Mars a day helps you work, rest and play” – and, whenever we launched a new burst of TV advertising, we spent the remaining 1% on an ad that would appear in The Grocer urging the trade to stock up in order to meet the imminent surge in demand.

This was SOP, all entirely sensible, and of course I had no idea that many years later, this pattern of activity would provide me with my most puzzling thought about the whole brand definition/brandpositioning/brand strategy thing which I’m so involved with these days.

The issue – which I’m sure I’ve blogged about before, but then again I’ve blogged about everything I have to say before – is about wanting brands to stand for different things in the minds of different target groups.

We didn’t put it in these terms, but if we had we would have said that beyond its physical identity, the consumer and trade Mars brands were – and were intended to be – entirely separate.  The consumer brand was all about food value – “all the goodness of milk, glucose, sugar and thick, thick chocolate.”  The trade brand was all about profit – the highest-margin countline on the counter.  We didn’t even bother to invent some bullshit over-arching rationale which could embrace both – “The Mars Bar stands for excellence in the minds of all of its stakeholders…”

And I must say that the Mars Bar didn’t seem to suffer from this brand schizophrenia – at the time it was by far the UK’s No.1 confectionery line.  Consumers, of course, were unaware of the trade brand.  And while the trade were aware of the consumer brand, they had no problem with the idea that these were the sorts of things that you say to consumers to keep the profits rolling in.

Of course I’m not familiar with the principles or practice of all of today’s leading brand consultancies, or even the leading consultancies working to any significant extent in financial services, but I don’t know of any which would feel comfortable with this kind of total dichotomy.  (Apart from anything else, I think all would regard it as the thin end of a very dangerous wedge:  if you can countenance a dichotomy when you have two target markets, then why not a trichotomy or indeed a quatrochotomy when you have three or four?  And what happens when you have eight or nine??)

So the phone-a-friend question is obvious:  what do you do brand-wise when you’re dealing with different target groups who relate to the brand in hugely, or even completely, different ways?

What about, for example, a financial advice business which obviously needs to address potential clients, but also critically needs to appeal to good-quality advisers?  Of course in this case it is important that the advisers understand the consumer-facing brand, and play their enormously important role in delivering it to clients and prospects.  But what it actually means, and needs to mean,  to them – its benefits, personality, values, essence, whatever headings you like to define brands under – just isn’t the same.  In ;principle, it’s just like the way that the owners of those CTNs perfectly well understood the Mars Bar brand consumer proposition, but didn’t actually relate to it personally.

This, I’m well aware, is a dangerous line of thought – best in many ways not to pursue it.  But remembering those distant Mars brand days, it’s one that I can’t quite get out of my mind.  I’m not happy with the answer that “it all comes together at the higher levels.”  Saying that “we stand for excellence in the minds of all our stakeholders” is far too vacuous to make any useful contribution.  But if that’s not the answer, phone-a-friends, what is?

Just as well I don’t pay myself for writing this

If I did, I’d have to think seriously about whether it was worth carrying on.  (No, with the blog, stupid, not with life.)  I say this because I’m amazed and more than somewhat distressed to see how little the going rate for freelance copywriters has increased over the years.

When I very first started giving work to freelancers, way back in the mid-eighties, the going rate was £200 a day. 25 years later, you can still get a freelance writer for £200 a day, although the best ones will cost more – certainly £300, maybe £400, possibly even £500.  Given that the invaluable inflation calculator on ThisIsMoney says that £200 in 1986 is worth £476 in today’s money, day rates overall have risen far more slowly than the cost of living.

You’d expect this would be the result of a supply-and-demand thing – too many writers, not enough copy to be written, a buyers’ market, hapless wordsmiths cutting prices to the bone.  But the funny thing is that actually, as far as I can see, the market dynamics are all the other way around.  As far as the advertising and other creative courses at colleges and universities are concerned, we all know that we’ve been through a long, long period in which the writers have been second-class citizens and the art directors and designers the first – everyone has heard the story of the college where pairs of students are teamed up on the first day and asked to toss a coin, with the winner being the art director and the loser being the writer.

And anyway, quite frankly, you don’t need to hear horror stories like this to worry about what’s happened to writing ability – you just need to read stuff.  There are quite simply no great writers these days:  there are people who can do short and pithy, and people who can do long and boring, and really nothing much at all in between.

And at the same time that the ability to write has been disappearing, new needs for writing and writers have been appearing absolutely every bloody where.  I wonder how many billions of words-worth of persuasive writing there are now on the Internet, for example.  And how many billions more are currently being written as components of social media strategies (no matter how horribly misconceived and unsuccessful most of these may turn out to be).

No doubt about it, on the basis of supply and demand these should be happy days for writers.  If you’re any good, it should be name-your-price time.  But it isn’t.  It so isn’t.  For the large majority, it’s how-far-can-I-edge-you-up-from-£200-a-day time.

Though undoubtedly large, I wouldn’t like anyone to imagine that I include myself within that “majority.”  For the brand-conscious one-man consultant, there’s no advantage in creating perceptions of cheapness.

But when it comes to my copywriting day rate, I’m not completely immune to the overall market dynamics.  And that being so, if you ever notice that I’m a teeny bit keener to write the strategy presentation than the website copy, this blog pretty much explains why.

White smoke from BlackRock

There are few things in life more satisfying than making predictions which come true.  You’re navigating in the car, and you say we’ll be coming up to a T-junction in about 300 yards…and you do.  You’re going to the football, and (rashly) say that you fancy the mighty Spurs to win 2-0 …and they do.  You observe, in writing, that you expect large asset management companies to start spending much more money on corporate brand advertising… and along come BlackRock with what looks like probably the most expensive campaign of its kind that we’ve ever seen in the UK.

My rationale for predicting more of this kind of thing is pretty simple.  On the one hand, the case for continuing to do the sort of thing that most (retail) fund managers have been doing for years, namely spending a ton of money on promoting individual funds to IFAs, is crumbling by the day as fewer and fewer IFAs remain involved in selecting individual funds.  And on the other hand, there is now a single uber-target audience who all want to know something about the brand and what it stands for, and who can all be addressed at once in a single corporate advertising campaign – an uber-target audience that includes retail investors, IFAs, retail fund selectors and portfolio managers, institutional investors and institutional consultants.

In the case of BlackRock, the need to build some clear and strong brand perceptions among all these people is particularly strong.  Having, as the saying goes, risen without trace from a two-room office in Century City to become the world’s largest asset manager in the space of what still feels more like months than years, BlackRock really is by far the biggest and most important asset manager that you’ve hardly even heard of, especially on this side of the Atlantic.  And with US$3.56 trillion under management, it’s not as if they can’t afford it.

So I’m not surprised that they’re the trailblazers of the new corporate brand-building, or the first to prove my prediction right.  And being a bit of a wordsmith myself, I’m not sorry to see them taking a largely verbal, argument-based approach to giving us a sense of who they are and what they do.

I do hope that campaigns from other asset managers following in their footsteps aren’t quite so boring, though.

Sorry, I know I’m being really thick about this

I’ve just been reading some spectacularly bad-tempered comments by IFAs on a Citywire story about the Money Advice Service.  (This is nothing new – almost all IFA comments on Citywire are bad-tempered, and most are spectacularly bad-tempered.)

Many touch upon the universally-held view that post-RDR, there will be millions of not-particularly affluent people for whom financial advice will no longer be affordable.  “At last,” thunders one, “It appears that someone is finally waking up to ramifications of RDR and the realisation that many people will be without access to financial advice.”  It’s a view that you hear expressed twenty times a day.

What I can’t quite remember, if I ever knew, is why we think that adviser charging is going to price millions of people out of the financial advice market,  The general assumption seems to be that initial adviser charges are likely to be about 3%, and ongoing adviser charges between .5 and 1.0% per annum:  these are entirely in line with the sort of commission payments under the previous regime.  And, as we all now understand, most adviser charges will be “facilitated” (i.e. made) by product providers, so that the client doesn’t actually have to endure the pain of writing out a cheque.  That being so, the level and nature of future adviser charges seem much the same as the level of present day commission.

There is one new factor:  the FSA is very unenthusiastic about cross-subsidy in the adviser charging world, so if IFAs are currently looking after low-value clients in return for ruinously unprofitable remuneration, they will find it difficult to continue.  But although I’ve argued elsewhere that cross-subsidising loss-making clients can be a sensible business decision and the FSA has no right to interfere with it, I can’t believe that out of the goodness of their hearts IFAs are generously cross-subsidising millions of such people.

So my question is, why exactly do so many people seem so certain that RDR will make financial advice unaffordable for millions of “ordinary” people?  I know I must be missing something here, but I can’t see what it is that’s going to make the cost of advice increase all that much (if, indeed, at all).

One thing which RDR will bring is a fair bit more transparency.  Ordinary people will be able to understand rather more clearly how much of their money is being creamed off by intermediaries, often in return for very little by way of service.  But that indisputably-welcome development can’t be what everyone is getting so excited about, can it?


Have we ever really stopped thinking that we “own” our customers?

Until fairly recently, all of us in financial services would thoroughly enjoy a good discussion about which of us could best claim to “own” the customer.  Individual advisers, advisers’ head offices, life companies, platform providers, asset managers – all could make pretty good case.

Then a little while ago, the language changed.  The word “own” disappeared.  If you used it, you’d quickly be taken to task.  “Vocab fail,” you’d be told.  “None of us owns the customer.  We’re all just providers of products and services.  Only the customer owns the customer.”

What’s become clearer and clearer to me ever since is that sadly, while the language did change, the underlying attitudes really didn’t.  And nowhere, I think, is this more apparent than the area of mergers and acquisitions, where customers are bought and sold just like vast herds of cattle.

There was a quietly telling letter on just this point in one of the weekend papers.  An elderly couple both banked with Lloyds, but at different branches.  Now, frail and not too mobile, the wife wanted to move her account to her husband’s branch, which was nearer home.  But when she enquired, she was told it wasn’t possible.  Completely unknown to her, it emerged that her branch was one of those being sold to the Co-operative Bank within the so-called “Verde” transaction next summer, and until the deal has gone through transfers to other Lloyds branches are not permitted.  She would have to wait at least until then, when more information would be provided.  (Transfers to other banks, of course, cannot be prevented, and I don’t think I’m in too much doubt what I would do in her place, but that’s another story.)

It’s not the worst financial story you ever heard, but there could hardly be a more revealing demonstration of the way that when push comes to shove, banks – even the caring, sharing Co-operative – will always put their own interests first and their customers’ second.  The price of the deal, obviously, depends more than anything on the number of customer accounts that actually find their way over to the Co-op, and if happy Lloyds customers transferred out en masse, then the price would be too high and an unwelcome renegotiation would be necessary.

And if – not wanting to wind up the emotional climate too high, but anyway – if it’s a bad winter, and that lady slips on ice after visiting her branch, and breaks a hip, and, well, you know how the rest of the story goes at that age – well, what the hell.

It would just mean that sadly, in that particular case, neither of us would turn out to “own” the customer.

It’s “if I were you, sorr…” time again

The awards at last Thursday night’s Platform Awards generally finished up in the hands you’d expect, but there was at least one medium-sized surprise:  something called Money On Toast (www.moneyontoast.com) won the Innovation award.

I must admit that much as I try to keep up with developments in the D2C investment space, I’d missed this one (a point to which I shall return).  Looking at it the following morning, I could see… well, what could I see?

I could see that a hell of a lot of work had gone into it.  But I could also see something less good:  a great big shuddering disconnect between its amiable, unsophisticated, pretty dumbed-down front end, and a back end which launches its customers into the deep and dark waters of Cofunds, with thousands of funds to choose from and all the anxiety and complication that the front end had tried so hard to alleviate.

The potential D2C investment market, I would say in slightly simplistic terms, is made up of two segments:  those who will like the front end of this service, and those who will like the back end.  In between, there may be a tiny little overlap on the Venn diagram where a handful of people like both, but, I strongly suspect, nothing like enough to make a viable business for Money On Toast.

There’s another thing too, which is that as one of the few hundred people in this country most interested in D2C investment services, even I had managed to completely miss this one.  What I suspect this means – unless of course the multi-million pound advertising campaign just hasn’t quite started yet – is that Money On Toast has to be added to the growing list of new-wave D2C investment services which have launched without anything like enough money to make any marketing impact on their target group – a list which already includes the likes of rplan, Nutmeg, Investor Bee and a couple of others whose names I momentarily (and relevantly) forget.

But, to be honest, although this is a big issue, I reckon it’s actually a secondary big issue:  all of these services are so flawed that in my viw, if they did have millions available for promotion, it would largely be money down the drain.

The big point here – and the thought behind my headline – is that actually, if you want to launch an investment service targeting the less sophisticated and confident market, investment platforms actually have little or nothing to do with the solution you – and they – are looking for.  There tends to be a bit of an assumption that because D2C is all the go at the moment, and platforms are all the go at the moment (and also because Hargreaves does D2C using a platform) that the two are joined at the hip.  But, as Money On Toast demonstrates, nothing could be further from the truth.

Unsophisticated investors want simple investment solutions, not huge arrays of choice and complexity. They need platforms like….fish need bicycles?