Engage and educate

A ‘no hard sell’ approach is the way to engage consumers with financial information and education, finds John Greenwood

The Queen’s Speech confirmation of plans for a national organisation that will deliver Money Guidance to the masses reflects an acceptance of the same challenges facing employers attempting to engage staff in their benefits offerings. Current developments in both state-sponsored financial information and workplace offerings reflect a sense that the time for giving consumers the tools to understand the complex financial world they face has finally come.

The importance of consumer knowledge, understanding and empowerment are at the heart of the Government’s proposals. Not only did the Financial Services Bill herald the introduction of new powers for consumers to collectively challenge banks in court, but it has confirmed that resources are to be put behind a new independent consumer financial education body, established by the FSA. The new body will increase financial education and awareness among consumers along the lines proposed by Otto Thoresen, chief executive of Aegon UK.

The new body will roll out from 2010 the national Money Guidance service currently being joint-piloted by the FSA and the Treasury that aims to deliver accessible, impartial guidance.

Thoresen believes that the pilots will be unlucky if they have to deal with an environment as taxing as that of the last year. “I based my blueprint on the fundamental insight that an independent source of guidance and information on money matters would fill a big gap for people in how to get help about all aspects of their finances. The Pathfinders that the Government and FSA have run put that blueprint to the test in the harshest financial climate imaginable, and they’ve clearly passed that test.”

People are not always rational in their decisionmaking when it comes to money matters

Few people challenge the notion of the importance of a trusted source of consumer information, particularly with the advent of personal accounts in less than three years. Ian Pearson, economic secretary to the Treasury, says: “Impartial, trusted guidance on money matters – which is geared to addressing users’ needs and questions, not selling financial products – is needed more than ever.”

And while the private sector may be covering similar ground with souped-up information services through the workplace, particularly through corporate wrap offerings, these will major on web-based delivery. They will also not be made available to everybody. With 64 per cent of private sector employees not currently being offered any employer pension contribution at all, the much-vaunted consumer information and education benefits of corporate wrap propositions, which are still on the drawing board in many cases, will remain the preserve of the few.

Those in the private sector charged with delivering member communication messages will doubtless be taking a close look at the outcomes of the FSA’s Pathfinder pilots, which are due to deliver their report a year after launch in Spring 2010. This will give a picture of the range of issues that consumers are finding of interest, and will also demonstrate the depth of explanation they will be seeking. No statistics have been released yet on this, but early indications are that the majority of inquiries have been relatively basic ones, and have not required a high level of expertise to answer. It is fair to say that consumers have not been ringing up asking how to rebalance their self-select Sipp. Jane Vass, financial services policy adviser at Age Concern, who has been involved with those delivering the advice, says: “We have found that many of the inquiries have been simple questions that have been extremely straightforward to answer.”

The Government’s move comes as providers are setting out their stall as the natural home for employees wanting information and education about their finances. Friends Provident has recently launched its new financial education and support service aimed at helping employees understand how to manage their money effectively. The new Friends’ ‘My Money and Me’ service provides a series of impartial modules designed specifically to increase financial awareness for the UK workforce. Like the Treasury, it too wants to put a ‘no hard sell’ message at the centre of its offering. At the core of the new Friends’ service is a qualified, specialist team of 15 consultants who will facilitate generic financial education workshops in a sales free environment for employees. These include workshops focusing on retirement planning, money management, defined benefit/contribution demystification, and employee benefits.

Neil Hawkins, national employee communications manager at Friends Provident, says: “People are not always rational in their decision-making when it comes to money matters. Our new materials are designed to counteract negative behaviours such as inertia, over confidence and herd mentality, and highlight the importance of informed individual decision making.”

Whatever the marketing departments say, independence and an emphasis on advice over sales will be centre of building trusted forums for employees and consumers generally to access crucial financial information.