Watching Martin Lewis’ money show last night I found myself aghast! Someone was trying to weigh up whether it was better to get 0.1% pa tax-free from an HSBC ISA or get 0.4% pa from another HSBC account and run the risk of paying tax on it.
Who’s framed this choice? HSBC I’ll be bound!
Lewis turned on the question with grim relish “clearly you are a new viewer” – (sub-text or a total loser)
“you are asking me whether to take money from a spit-worthy account to another spit-worthy account ” the answer is you should use neither. You should be taking the money away from HSBC and getting a proper rate elsewhere (and by the way I very much doubt you are earning enough interest on your savings to need an ISA anyway)”.
I paraphrase from memory but you can see the episode (f you can bear the ads) here. (8 minutes thirty).
The point is not that the question came in on some digital account but that the answer was clear and real. This is Martin Lewis at his absolute best getting viewers off their sofas and onto their devices , searching best rates and making their money go further.
Compare Martin’s with our pension messaging
Yesterday I had a go at Professional Pensions for publishing three articles in as many days all saying that pension schemes can use data-analytics to push messaging out to members in a more targeted, more personalised and more effective way.
My grouse was that the power of data analytics is awesome and just because you can identify the members of your pension scheme who you think need “education” or “nudging”, doesn’t mean that you are giving people the information they want.
I get “targeted” by hundreds of messages each day, all driven by my social media profile and all trying to sell me things I don’t want. It’s boring and time consuming junking mails and I do precisely the same with the pension messages. They are not telling me what I need and want to know. They are not interesting.
As my Mum tells me “If you haven’t got anything interesting to say, keep your mouth shut”.
Our messages are mostly junk
Just because you own a data-set, doesn’t mean that you have the right to bore.
The data you hold on your customers holds some very interesting information
- The actual return your savers have achieved (known as the internal rate of return)
- The amount of risk taken to get that return
- The value your savers have got for the money they’ve given you
- The value you’ve given them for the risk you’ve taken
This data is held within the contribution history of each of your savers and unlocked by comparing the contribution history to today’s outcome, the pot size – technically the NAV.
If you own the data set, or even if you have a right to an anonymised version of it, you can unlock the answers to the questions people are really wanting answering
- What have I got?
- What will it get me?
- What has cost me?
- Have I done well?
- Did you do a good job?
By “you” I mean the people who had hold of people’s pension savings. If you are not telling people the answers to these questions , you really aren’t telling them what they need and want to know.
You are keeping your savers in the dark and all the messaging about saving more, or being financially resilient are you being boring. People should have the right to turn you off , but most people can’t – so they just send your messages to junk.
This is a shame, your data holds the information people want to know but you either don’t know how to, or don’t want to tell your captive audience what they want and need to know.
Do you want to be like Martin Lewis?
If you want to be trusted, you need to be fearless and tell people how it is. i would love to say that I agree with this post on Linked in! But I don’t….
I don’t agree with the post or the blog that Rhys has written because it perpetuates a long-standing myth that so long as everyone else is doing it, it’s ok.
“If I can see the benefit to me – a more relevant message, richer information, a smoother process, a more enjoyable read and best of all, a more prosperous life after work – then it’s all good”.
Actually being fed the placebos of the pension industry that everything is going to be good is what people dislike about our communications.
Right now people’s pension pots are between on average about 20% lower than they were in February. Many of us will have to stop paying into a workplace pension because we will be made unemployed. Many of my age will not get a job again, we may never see pension values like they saw in February again. These are uncomfortable messages but they are the ones people need to hear and act on.
Many people are very frightened about their pensions and they need someone like Martin Lewis who is not going to feed them the “which shade of HSBC” bullshit but point out that to get the best from their savings . People are going to have to find out what is going on and make informed choices.
If you want to be like Martin Lewis and properly communicate with your members/policyholders/savers, you’re going to have to stop agreeing bland placebos with each other and start telling people how its is.
Shoot the message not the messenger
Data is awesome and data analytics tells us everything we need to know about our customers.
Data analytics should not be used just to feed the same old stories to our customers as we’ve been churning out for the 40 years I’ve been doing this job.
People are bored with hearing the same messages telling them to save more , longer and with their current provider.
People would like to know their choices and those choices have to be “open market”, As I keep saying, so long as you suppress choices, the less people will trust you.
Telling people how it is – good or bad – using the data you hold for your savers – is the RIGHT THING TO DO.
If you can’t tell you people what their data says – I will.
It is relatively rare for me to disagree with your thoughts, Henry, but I have to take issue with statements that appear – I was going to say “out of the blue” but certainly may be unwise to generalise about.
“Right now people’s pension pots are between on average about 20% lower than they were in February.”
OK – so I’m not everyone. And I may be “lucky” but as my experience is that I am about 7.28% down on my “peak” pension pot size – which happened to coin- cide with February 2020 – I am, in fact, about where I was late last November.
So – if the average is -20% then someone has done pretty badly in comparison.
But this misses the point – for me and most pension-pot-savers (or “pension- potters”) this was all academic. This was academic unless you wanted to commence decumulation, but had not prepared properly for that event. Or if you had commenced decumulation, but had not prepared for sequencing risk. Or you did not understand these concepts, or an adviser had not educated, and tested and validated your understanding of what those risks were.
I’m not saying that any of those theoretical, poor outcomes would be unreasonable occurrences – and potentially very uncomfortable. I am saying that, gener- ally speaking, raising – without context – the fact of paper losses is the wrong way to instil confidence in people who should be planning retirement using pensions whatever happens.
You rightly have gone on to talk about how the overall shape of investing/saving into pots being largely disrupted – and that is the key point. Just because your path has potholes, it doesn’t mean you should either avoid the journey or go off- road if you haven’t made all the preparation to do so.
My main and probably only gripe, therefore, boils down to the generalisation and sensationalism about messages of XX% drops, losses or decimations – wherever they pop up. The investmentally grown up can cope with these mini-headlines because they can contextualise, but those who are investment learners cannot be exposed to little tidbits of otherwise factually correct points that don’t compare to their own person- al circumstances. They simple are not mature enough to have informed positions on limited information.