Let them eat cake

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OK first things first, before the comments section (if one existed) is littered with people correcting the title of this article. Of course, the actual phrase used was “Let them eat brioche” and it wasn’t, as often assumed, uttered by Marie Antoinette. It was in fact ascribed to a mythical princess by Jean-Jacque Rousseau whose major work The Social Contract is still highly relevant today.

Still the phrase is at least well understood these days as a shorthand for an out of touch elite suggesting solutions that belie a complete misunderstanding of the real world.

That’s my view of the financial services industry.

It applies to all the actors; providers, advisers, regulators and indeed the media. The brand value of the financial services industry is about as low as you can get without entering politics or tabloid journalism. And we deserve it. All of us.

We’ve lived with scandal after scandal and seem to respond to each and every one with a terrible wringing of hands and a new set of regulations which only widens the gaping chasm that exists between ourselves as an industry and our potential clients.

It’s no good the industry, a company or any adviser producing a list of customer satisfaction ratings as a way of disproving this theory. That’s just the worst kind of selection bias. It’s the people that don’t engage with the industry (who by definition cannot be clients) that should shame us.

Indeed the fact that the government (don’t get me started on them!) has instigated the de facto nationalisation of the group pensions industry, coupled with soft compulsory pension contributions on a highly unwilling public through the National Employers Pension Trust (NEST), is a tombstone of our failure.

But worse, NEST is exactly the sort of chattering classes solution to the serious problem of people’s general reluctance to invest for the future through a pension:

“The people are starved of investments they have any confidence in ma’am”

“Then let them compulsorily opt-in to NEST my good man”

Time will tell but a key statistic to watch over the coming months is the opt out rate from NEST. Within 12 months I suspect it could be over a third – the danger is of course that it reaches a critical mass when the whole thing implodes. But more, much, much more, on that later.

Let me be very clear here – I’m not setting myself up as the industry man of the people, who can personally bridge the valley between “real people” and the financial services industry. I don’t know how “ordinary people” think about financial services, I’m so out of touch I have to pay amarketing agency to tell me. I have to be tied to a chair and held down (and no I don’t like it) whilst I watch behind a one way glass with increasing frustration as my first draft marketing copy is torn to pieces, by members of the public who form a focus group on the other side of the glass, as being intellectual and inaccessible. It’s a humbling experience, but it means that the second and third draft of the copy improves dramatically, but we need a lot more humility in this industry – all of us.

We’ve got a long way to go to earn the trust of our existing and potential customers in the future. But they say the first stage to fixing a problem is admitting you have got one.

So… My name is Neil Lovatt and I’ve acted like a princess telling the masses to eat brioche. I will get better.

No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.