by Anna Lane, CEO
A glance at the latest HMRC ISA statistics shows that four in five accounts opened are cash ISAs. And everything that I have seen this year would lead me to believe that this ratio, which has been very consistent in each of the past 20 or so years, will not change any year soon – in fact in the latest figures available for 2019 volumes of cash ISAs increased while stock and shares ISAs fell. Unfortunately for many people, investing in a stocks & shares ISA simply conjures up images of The Wolf of Wall Street and given the year we have had, it is perhaps no surprise that stocks and shares ISAs have suffered outflows of £1.12bn over the past 12 months.
Optimists suggest that the strong emergence of ESG and RI investing could be the switch that turns consumers onto investing. After all, there is a groundswell of public opinion for sustainable change, driven by passionate calls from high-profile activists such as Greta Thunberg and Sir David Attenborough, while the pandemic has arguably intensified the climate change debate. Our RI research, the full findings will be published next year, shows that sustainability gets as many online mentions as the Premier League. Yet our research also highlights that while people think about sustainability in their everyday lives, the majority do not associate it with finance – or even think about their finances at all.
Only 8 per cent seek financial advice
There is always an exception to the rule, as with more engaged investors – they account for around 25 per cent of RI investors. And our research reveals that these investors are more likely to invest in ESG mainly because they typically ask for financial advice. But here is the quandary – most people don’t take financial advice. As the FCA’s evaluation impact of the Retail Distribution Review and the Financial Advice Market Review highlighted earlier this month, only 8 per cent of UK adults have ever received financial advice.
Financial services marketeers agree that you have an entirely different conversation with someone who already sees themselves as an investor – they are far more receptive to engaging with communications. Yet our research shows that most people with a pension do not consider themselves as an investor. We need to find ways to understand what makes people tick; we need to be able to talk to consumers on their terms, in their territory, when the time is right for them.
It’s an area that we have been exploring this year using FMCG techniques. During the summer, using our original Yes She Can study, we dug deeper into the research to find out who these women that aren’t saving are so we can provide data that is relevant, tangible and consumable for marketeers. Working with brand data-insight experts we created seven cluster groups of ‘real’ women – based on their lifestyle, needs, buying habits, aspirations and importantly aligned to behavioural intent to engage with the call-to-action content. We have undertaken a similar project with our RI research too – so we can engage with people who will have no clue whether their pension is invested responsibly or not.
One size fits all marketing approach not fit for purpose
Social restrictions and lockdown have meant that digital, more than ever, has come to the fore and the onus has very much been content and communications. The investment industry is competing against a sophisticated group of consumer brands such as Amazon, which are leading the way with highly tailored communications. We at TWC have only stuck our toe in the water mirroring this consumer style of approach but we believe that if you can understand what makes people tick, who influences them and talk in their language, then you can start to move the dial.
A one size fits all approach to marketing is no longer fit for purpose. If people aren’t wealthy, they don’t believe they need financial advice and therefore, they don’t invest. The biggest challenge the investment industry faces is that investing is primarily a B2B brand not a D2C brand. This branding perception needs to change. A stumbling block is not so much helping consumers navigate the financial journey, it is getting them on that journey in the first place. We all need to adapt our approach, so we can truly understand the motivations of consumers, grab their attention and get them on board.