Financial advice and Sainsbury’s bacon slicer

I can dimly remember that in my early childhood, Sainsbury’s was still an old-fashioned grocery store.  You queued at the counter, and eventually it was your turn to give your order to a white-coated chap who scurried about on the other side of the counter assembling it for you.  If you wanted bacon, he’d ask a few questions: how much you wanted, obviously; whether back, middle or streaky;  smoked or unsmoked;  and whether cut thick, medium or fine.  If you didn’t know the answer to any of these questions, he’d ask about the use you had in mind for the bacon:  from this, the specification of what you needed could be deduced.

Needless to say, you weren’t allowed within yards of the bacon slicer.  You stood safely on the customers’ side of the counter, while the man in the white coat got that fearsome blade-wheel spinning.  The slicing done, your bacon was wrapped, weighed, priced and brought to you.

It sounds great, doesn’t it.  Personal service;  expertise;  bacon sliced to meet your needs precisely.  But of course, actually, it was rubbish.  The main problem was, it took so bloody long.  You might have to wait in that queue at the counter while half a dozen other customers had their orders assembled. If they were all big orders, complete with bacon and other bespoke services, you could be there for 40 minutes.  And there were other problems too.   Sometimes, the man at the counter gave you tiresome amounts of hassle, trying to encourage you to buy more bacon than you needed, or to buy expensive back when you wanted cheap streaky.  Sometimes he sliced your bacon from a tired old piece, all dried up and manky.  Sometimes he didn’t cut it very well, and half the rashers were too thin to cook properly.  And in any case, the truth was that your order simply wasn’t so special. All you wanted was eight ounces of thin-cut smoked back bacon.  All this tedious and expensive hand-cutting was way over-engineered for your needs.

Rather a lot of years later, this is not how we usually buy bacon.  Today, we pick up an eight-ounce (well, 225gm)  pack of dry-cured thin-sliced smoked English streaky, and drop it into our supermarket trolley.

Some might imagine that because we have to do this ourselves, with no white coated man, and because we don’t have the option of asking for 190 grams, or 270, or whatever, that the modern style of self-service is worse, a backward step from the old.  

But of course they’d be wrong.  It’s miles and miles better. It’s incredibly much quicker and more under our control.  It’s cheaper.  The quality of what we get is more consistent. And if we care, we can use the information on the labels to guide our choice – they’ll tell us the use-by date, the salt content, the country of origin, whether it’s organic or not, the price, and, more revealingly, the price per hundred grammes.

Whenever someone tells me how important it is that we should all go to an independent financial adviser whenever we want a financial product, I always think of those old-style Sainsbury’s and their bacon slicers.  For as long as the only way to get the bacon was to operate that terrifying machine, and for as long as the man in the white coat was the only one who knew which side of bacon was the smoked and which was the unsmoked, and which was the back and which was the streaky, then going to the man in the white coat was the only option.

But when Sainsbury’s and all the other supermarkets started pre-packing bacon, putting it on shelves we could access for ourselves as we went round with our trolleys, and giving the packs clear and informative labels that allowed us to make our own decisions, going to the man in the white coat seemed like a pointless complication most of the time.

In some very upmarket butchers and delis offering exceptional levels of quality and service (with prices to match) , men in white coats still hand-slice Iberico hams.  But for most of us, most of the time, all this tiresome palaver is as unnecessary as… well, as it would be in financial services if anyone showed the slightest interest in building a retailing business that’s actually easy for consumers to use.

Funny how much I hate it when outsiders criticise us

As you may have noticed, I rather like slagging off the financial services community.  (Community?)   But I hate it when someone from outside our village does it.  And I especially hate it when they do it at a public event, like a conference, and we all sit there shaking our heads at our own inadequacies like whipped and broken dogs.

A man from Google laid into us at a conference this morning.  Actually, that’s not really fair.  He didn’t say that we’re stupid and useless at innovation, just that Google are really brilliant at it.  He left us to infer our uselessness for ourselves.

It’s true that we’re not very good at innovation, and I’m sure there are some tips and tricks we can nick from Google and other fast-moving and innovative companies.  But the more I listened to this bloke, the more I actually thought that his world is so very, very different from the worlds of the life, pensions and investment company people present at the conference that really drawing any kind of comparison is almost impossible.  Here are a few of the differences that came to mind.

1.  The speaker claimed that Google, which employs 20,000 people worldwide, receives a million CVs a year, mostly from brilliant, highly-motivated people all over the world, who would chop their arms off to work there.  I don’t think this is true of Standard Life.

2.  He said the average age of people at Google is about 24 – 25.  People joining immediately after finishing their first and second degrees can do great work straight away, because they are “Internet natives” – people who have been actively exploring the possibilities of the digital world for all their lives.  I don’t think many “life company natives” join Scottish Widows in their early 20s and start doing great work immediately.

3.  Google has what Nike would probably call a “just do it” philosophy of innovation, and likes to get products out into the market in early and often imperfect beta versions, so that keen users can help to develop them and make them work properly.  I don’t really think Legal & General could do this with a protection product – the implications of launching something seriously imperfect would be extremely problematic.

4.  Considering the same point at a higher level, Google benefits hugely from living in a world where a very significant proportion of its customers are hungry for innovations, and eager to get involved and participate in the innovation process – in some cases putting in hundreds of hours of unpaid work to make new ideas work better, or to originate new ideas and bring them to the company.  Arriving for work on Monday mornings, I don’t think managers at the Pru or Friends Prov often find geeks in sleeping bags huddled outside the doors waiting for a chance to pitch their amazing new ideas.

5. Right in the middle of Google’s biggest office, there is a gigantic pipeline which discharges a torrential flow of money into the business every minute of every day of every month of every year.  This is Google’s search advertising business, which is now so big and so profitable that it may eventually use up all the money in the world.  When you can rely on a cash Niagara like that, encouraging people to think up some new apps that will never make any money counts as a minor act of corporate patronage, a bit like the Medicis in renaissance Italy.  By comparison, even the most successful life and investment companies deliver paper cupfuls of money.

6.  And finally, Google is in the sunrise digital world where none of the great ideas has been done yet, and its people are surrounded by thrillingly undiscovered frontiers on every side.  Even financial services dullards like you and me can think of loads of new things you can do with computers and phones and other online devices.  It’s a bit harder in life assurance.  My bet is that if a Google team and, say, an Aviva team swapped jobs for a while and spent a month trying to innovate in each others’ businesses, the Aviva team would come up with a very great deal more viable new stuff.

Dangerous writing pieces like this.  Sounds like I either don’t see a need for innovation in FS, or do but don’t think it’s possible.  Neither is true.  I do see a need and I do think it’s possible.   The point I want to make is one that I’ve made before in other contexts:  the thing about FS is that it’s incredibly hard – much harder than pretty much anything else in the consumer economy, including the things Google do.

And that’s why I hate it when we sit there like whipped dogs.  You try it, pal, if you think you’re hard enough, I want to say to the bloke from Google.   You’ll last about 5 minutes.

Providers and advisers: is death about to part them?

Not so long ago, the love affair between providers of regulated products and IFAs looked as deep and long-lasting as ever.  But when you start falling a bit out of love, you quickly fall a lot out of love.  And while providers and advisers may still look like the perfect couple to the outside world, I wonder more than a little about what’s actually going on between them behind closed doors.

What’s changed?  Well, as so often in tales of fading love, a third party has come between them.  In this case, of course, it’s the FSA and its Retail Distribution Review.  In launching this initiative – and, most of all, in sounding the death-knell for provider-determined remuneration – I don’t think the regulator intended to drive a wedge between providers and advisers:  the aim was only to drive them towards behaving in a more civilised manner towards the public.  But the FSA seems to be able to do very little without triggering off an avalanche of unintended consequences, and RDR is no exception.

The trouble is, RDR has got both parties thinking.  Advisers have started thinking rather unsentimentally that if life and investment companies aren’t going to be able to go on rewarding them so richly for their continuing devotion with large lumps of initial commission, there really isn’t any very compelling reason to put up with them any longer.  Nine times out of ten, there’s a perfectly viable alternative – usually a tax wrapper provided by a platform, stuffed with ETFs or virtually-no-charge index funds as an investment solution.  And actually, since putting that together looks cleverer and more complicated than buying an insurance company’s pre-packaged product, it may even be that under Adviser Charging, an IFA can actually justify a higher fee to his client.

Meanwhile,  providers have started thinking much more anxiously that without access to the control mechanism of commission, their ability to get the outcomes they want from advisers will become similar to the ability of an airline pilot to get the outcome he wants from his plane without access to a joystick.  Yes, you can design and promote sexy new products;  yes, you can build strong relationships;  yes, maybe, you can even do something about your diabolical service standards.  But unless you can offer products which either permanently (eg investment bonds) or temporarily (eg any product on price promotion) offer advisers more dosh than the alternatives, how can you actually be sure they’ll come through with the sales volumes you’re looking for?

It’s this prospect of a loss of control (or, to put it another way, the prospect of a world in which advisers actually choose products because they’re good, rather than because they pay more) which frightens providers so badly.   It’ll be very interesting to see, for example, how many investment advisers carry on recommending high-cost, poorly-performing actively managed funds over ETFs and index funds when they have no financial incentive to do so:  if I was running a firm making most of its money out of charging 3% up front and 1.5% per annum for the services of active fund managers delivering consistently below-average performance, I’d be pretty anxious too.

While advisers, therefore, consider the extraordinary possibility of doing a better job for their clients, providers look for target markets too ignorant to resist overcharging.  A few firms have found some excellent options overseas:  I speak from profound ignorance and I vigorously apologise if I’m wrong about this, but I’m told that Prudential, to name but one, is able to maintain margins on sales in the developing world at a level we haven’t seen in this country for 30 years or more.  But these days, the large majority of firms are looking much closer to home:  the Internet offers lovely low-cost access to millions and millions of consumers who have no idea that 2% p.a. is an absurd amount to pay for any fund manager who isn’t Anthony Bolton or Neil Woodford.

This is good for me, I suppose, provided I don’t lose too much sleep over the value for money question.  Among our clients and prospects, the balance between those focusing on intermediated and on direct channels has changed dramatically over the course of the year.   Is it good for consumers?  Not sure.  The FSA is certainly right that on the whole – with many admirable exceptions - the broad mass of consumers have been horribly badly served by the outgoing tied and independent advice regime of the last 20-odd years.  I wish I felt that on the whole – leaving aside more affluent people who I hope and probably believe will be better served by post-RDR advisers – the broad mass will be better served by the incoming provider-owned distribution regime.

Is half an idea better than none?

There was a letter in Campaign the other day bemoaning the lack of creativity in the current posters for Sensodyne toothpaste.  Honestly, said the angry correspondent, all they’ve done is to typeset the propositions from the brief – and, what’s more, in a typeface that looks suspiciously like Times New Roman, in black, against a white background. 

It’s a fair point.  The headlines do indeed say things like “Sensodyne toothpaste can help reduce the pain you feel if you suffer from sensitive teeth.”  You can’t imagine that this brief detained the copywriter, or indeed the art director, for long.

Meanwhile, at more or less the same time, we’re also seeing a very heavy outdoor and tubecard campaign for the giant insurance company AXA.  This brief has clearly detained the copywriter and the art director for a very long time indeed.  They have grappled manfully, or womanfully, to try to make some kind of sense out of an impossible cocktail of what I suppose one might describe as “creative elements” – a bunch of specific AXA products and services to promote, some shots of people looking kind of pensive, the creatively-barren diagonal red line that AXA seem to want to make into the world’s dullest brand icon, and a bunch of hand-lettered words that are supposed to reflect the photographee’s worried thoughts about their lack of financial  planning.

The result is, frankly, absolutely hopeless.  It may be the worst outdoor campaign for a major financial institution ever.  It doesn’t do anything.  It doesn’t engage, it doesn’t reward, it doesn’t dramatise, it doesn’t surprise, and most of all, it doesn’t communicate.  I confidently predict that the campaign will not bring about the slightest deviation in the relevant graph-lines of the Hall & Partners tracking studies of AXA and its major competitors.

On the upside, no-one is going to write in to Campaign saying that it’s just the propositions from the brief set in Times New Roman.  But really, which campaign is a) more effective and b) more agreeable?  Maybe I’m getting old.  But, albeit without any great enthusiasm, I’d take Sensodyne’s clear and uncluttered typesetting over AXA’s ridiculous hotchpotch any day of the week.

Rant mash-up #1

I’ve been worrying a little recently about running out of rants.  How many different things can a middle-aged man be grumpy about?  Yesterday evening, though, I saw a possible solution – bringing numbers of previous rants together into new combinations.  Or mash-ups, as I believe we now say.

Perhaps unsurprisingly, I was at Gatwick at the time.  Gatwick, even more than the other UK airports owned by Ferrovial, lifetime winners of the World’s Worst Company award, is Rant Central, a loathsome place which misses no opportunity to show its hatred and contempt for its customers.  And now that Ferrovial have been forced to sell it, they care even less than they did before, which is pretty astonishing because we’d all assumed their care level had been at rock-bottom for years.

One of the things about Gatwick is that you have plenty of time – really an enormous amount of time – to seethe.  Last night, for example, the time from the plane landing to the train leaving was longer that the time of the flight from Toulouse:   no empty gate available to receive the flight, then problems connecting the airbridge, then weirdly the airbridge led not to the terminal but down some stairs to some buses, then buses not ready, then hugely long and circuitous bus journey to the terminal, then terminal doors locked and no-one with a swipe card, then absolutely mindblowing queues for passports in that funny passport hall where there have been entirely mysterious building works going on for about a million years, and then finally half the customs hall shut for building works so the horde of incoming passengers all having to shuffle very slowly through one narrow corridor tripping over each others’ suitcases and cursing as we visualised the 11.05 Gatwick Express pulling away with all of us not on it.

Yes, yes, you’re saying, that’s all very well, we hate it too and you’ve said all this before, but where’s the mashing-up bit?  How does this connect to Rant 2?  Well, not sure if I’ve mastered the mashing yet – I guess the truth is that the two are sitting there side by side, like a couple of boiled potatoes in a pan just before the masher gets to work – but the other one is the one about why won’t more organisations allow us to pay them more for a better service.

The fact is, the passengers on the late evening Easyjet flight from Toulouse are a pretty upmarket bunch.  Out of season, it’s largely the second-home crowd going to and fro, and the fact that they’re on a budget airline shouldn’t mislead you:  there are an awful lot of black credit cards in their wallets. 

Black credit cards that get very little exercise when arriving at Gatwick.  The Fast Track thing doesn’t work at all on incoming flights, and even outbound it only works if you have a business class ticket.  But how much would the passengers on that one flight have paid to avoid all that rubbish yesterday evening, just to get on a bus from the plane that has a passport officer on board so they can go straight through to the station or the car park (becoming somehow miraculously re-united with their luggage if they have any, which most of us second-homers don’t) in 20 minutes rather than an hour and a half?  I would guess that of the 150 people on last night’s flight, up to a third would pay an extra £20 for a truly express service.

These days, dozens of passengers pay about a tenner for the almost-completely-pointless priority boarding on the low cost airlines – but there’s no way to pay extra for priority services in airports themselves.  I don’t suppose this is hugely surprising – it’s difficult to think of any good or interesting ideas that the World’s Worst Company has introduced during its period of ownership of most of Britain’s airports – but it does feel like a missed opportunity.

I usually feel obliged to create a link, however tenuous, between my ranting and the world of financial services marketing, and this is no exception.  Connoisseurs of this blog will remember that the last time I gave my why-can’t-we-pay-more-to-get-more rant an outing, it was specifically in the context of financial services like pensions, investments and insurance.   It is this time too – it’s just that on this occasion, I’m making the point by analogy.

These last few weeks, I’ve stopped fearing phone calls again

You can choose for yourself which advertising guru was the first to say that agencies are only ever three phone calls away from disaster.  No-one actually knows, so your answer is as good as anyone else’s.  Your choice will reflect something about your tastes, but also about your age (young people think it was first said in the current recession by some 28-year-old running a dotcom agency:  I first heard it the year before any 28-year-old was born, back at the beginning of Thatcher’s early-80s recession, and I suspect it was first said pretty soon after the phone and indeed advertising as we know it were invented, some 100 years before).

Anyway, whoever first said it, and when, it lives on because it’s more or less true.  In our case, we may have gone into this current recession in a state of slightly greater resilience than average, because when things were going well 18 months or so ago we didn’t have any very large accounts dominating our income or profit:  as a result, since then, we’ve probably taken not just three but at least half a dozen of those phone calls without being completely annihilated.  All the same, as you can imagine, by the end of this summer no-one was exactly rushing to answer the phone.

Now, though, it’s late autumn, and I think I do just about dare to say that things are a little different.  On the whole, touch wood, the phone has become a friend again.  You answer it, and find yourself speaking to nice jolly people wanting to do things, receive proposals, organise meetings, hold pitches.  From somewhere deep within your pre-recession memory, you remember that whoever it was who said that thing about being three phone calls away from disaster also said that you’re only ever three phone calls away from what I think he described as “triumph”.

Not quite sure exactly what “triumph” might look like, but in any case it’s probably something a little more than just a chance to take part in a 4-way pitch for a fifty grand fee.   But still, if you call the agency these days, I suspect you’ll find we pick up the phone a lot more quickly, and a lot less twitchily, than we did a few months ago.

Incorrectly-spotted dicks

As my eyesight fades, my brain becomes increasingly puzzled by what I think I’m seeing.  Looking at the departures board at Euston for details of my train to Manchester the other day, I thought it said “Toilet restrictions will apply on this train.”  I pondered for some time on the nature of these restrictions before I realised that it said “Ticket restrictions.”

Today, on the tube, I found myself opposite an ad in the Windows 7 campaign that I wrote about recently.  It showed a girl in a fashionably distressed urban environment, with a headline in inverted commas that seemed to tell us she was saying:  “I asked for fewer dicks. Now it takes fewer dicks. I’ve never been so influential.”  I pondered for some time on the nature of these dicks before I realised….well, you’re ahead of me.

Although they are, of course, a regrettable symptom of the ageing process, I’m quite enjoying these visual malapropisms, and I wonder what’ll be next.  Must be about time for a new movie from CLINT EASTWOOD. 

After three years, my first taxi driver story

The well of inspiration must be running dry.  It’s a well-known journalistic truth that the last resort of the blogger or columnist bereft of ideas is to write about what taxi drivers say to them.  In a small but novel twist on this desperate tactic, this blog will in fact be about what I said to a taxi driver. 

In London at the moment, there really are zillions of cabs driving around with their lights on.  In parts of London, after dark, you could probably dispense with the street lights, they’re providing such a bright orange glow.  When I took a cab at Paddington the other day and drove back along the length of the waiting queue, the meter was showing about £5.50 before we reached the end of it.

To me, one major conclusion was obvious:  cabs have become too expensive for the current climate, and it’s time for some permanent or temporary price promotion.

There’s so much that cabs could do – all the same things, in fact, that are already being done by every other form of transport in the universe when faced with a market as difficult as today’s.  Drivers could offer us BOGOFs.  Or discounts if we travelled at off-peak times.  Or loyalty cards like Cafe Nero that give us one free ride for every ten paid for.  Or family discounts so that it actually costs less, rather than more, to travel with children.   Or an equivalent of Orange Wednesdays, so that, say, the after-8pm excess is waived for customers of a particular phone network.  Or… well, you get my point.

In fact, cab drivers do absolutely none of these things, and, based on a sample of the Cab Drivers At Paddington, have at least a dozen reasons why they couldn’t, shouldn’t and never will.  Some of these are fairly good reasons, like, for example, that their regulator, the Public Carriage Office, absolutely doesn’t allow such things (although the regulators of every other form of transport seem perfectly happy with promotional pricing, so you can’t help wondering what the PCO’s response would be if they were actually asked the question).   But the main and most strongly-held objection of the Cab Driver At Paddington was that business is already quite bad enough, thanks very much, without the insanity of giving away a proportion of the proceeds from the dwindling handful of passengers still willing to stick their arms up and flag him down. 

So, in the end, despite my best efforts, I’m afraid this is a piece about what my cab driver said to me, rather than the other way round:  on a sample of one at least, the very clear message on this occasion is that cab drivers don’t really get sales promotion.

Oh dear, is that really who you think I am?

As chance would have it, two giants of the digital world – Yahoo and Microsoft – are running basically the same outdoor campaign at the moment. 

Each has a big new story to tell – Yahoo a full-scale relaunch, and Microsoft the latest iteration of Windows, Windows 7.  And without boring you with the details (which are, indeed, quite boring), both campaigns aim to work primarily through the not-unfamiliar means of showing the target market large, well-photographed pictures of itself.

For people who do indeed look like the slightly edgy, stubbly, deeply-dressed-down, almost withough exception white 20-somethings in the two campaigns, I’m sure this works well.  But for the 90-odd per cent of the population who don’t look like that – those of us who look older, younger, balder, fatter, blacker, more clean-shaven, whatever – all that these campaigns say is that these products and service are designed for someone other than us.  This is, of course, a counterproductive message.�

It’s an issue that arises in financial services all the time, not least because in such an abstract and intangible world we tend to latch on to the idea of showing pictures of our clients’ customers as drowning men latch on to lifebelts.  But these lifebelts can’t take our weight.  For every customer who recognises him or herself, there are a dozen who feel misunderstood and antagonised. 

(None more so, incidentally, than those customers and potential customers of Barclays all over the world, when Barclays introduced a global visual identity a few years ago based on the so-called “Gallery of Life,” a photographic library showing their customers in quirky situations and doing quirky things.  This was tricky enough in the UK, where they had brochures featuring one cover photograph of one person, or group of people, with whom the entire savings or personal loans or mortgages market had to identify.  But it was absolutely ludicrous in ethnically fragmented or divided countries like Malaysia, where Barclays had an impossible choice to do with which four out of the country’s five major ethnic groups they wanted to antagonise.)

On a more local, less global scale, we’ve worked on marketing communications for the wealth management firm St. James’s Place for 20 years without ever once showing a picture of what we think a customer looks like. Same problem:  if we show a duke, then our self-employed newsagent clients feel intimidated, but if we show a self-employed newsagent then our dukes feel badly out of place.

I’ve always felt strongly about this, and have flown one-man search-and-destroy missions whenever a client, or a creative team, have shown signs of succumbing to this unwise approach.  That being so, I’m grateful for Microsoft and Yahoo for their current poster campaigns:  they reassure me that I’m right to do so.�