I’ve been spending quite a lot of time in industry gatherings of one sort or another lately, and I think there’s one thing which I find more irritating, and also more unhelpful, than anything else.
That is the total, unchallengeable conviction on the part of pretty much everyone from theÂ life and pensions industryÂ that consumers really ought to be putting large amount of money into their products and services, and that the world would be a much better place if only they did.
Up to a point, this is not unreasonable.Â Before almost anyone can market almost anything, they have toÂ convince themselvesÂ thatÂ they’re offering aÂ hugely life-enhancing experience.Â I’ve lost count of the number of clients who’ve told me over the years that really, their product, whatever it may be, is so much better than anything else on the market that, honestly, consumers would simply be daft not to.
But the zeal of the life and pensions people goes far beyond this.Â They are positively evangelical, in much the same way that 19th century Christian missionaries in Africa were evangelical.Â Those who don’t believe their gospel are just plain wrong.Â And we should stop at nothing – government-sponsored campaigns, education in schools, changes in the tax and benefit system – to help people understand the error of their ways.
This conviction – that life assurance and pensions are essential components of a successful life – is so deep-rooted that it’s almost beyond challenge.
But like many other equally deep rooted convictions, it’s also absolute tosh.Â I have nothing against life assurance, and not all that much against pensions.Â But I really wish the industry would understand that from the perspective of consumers, they’re just some more options competing for a slice of their scarce disposable incomes – and that for millions of people, deciding not to put money into them, but to put the money into a whole range of other options from subscriptions to Sky to private education for the kids to foreign holidays to meeting the cost of ageing parents’ long-term care, is entirely sensible and reasonable and not at all a mark of ignorance or profligacy or folly.
This is particularly true for life assurance.Â It’s true that there are horrendous stories about young families suffering hardship after a father or mother dies without life assurance.Â But this isn’t in itself a compelling reason to buy it.Â Most young fathers and mothers don’t die.Â For the huge majority, the premiums are just precious money down the drain.Â Yes, not buying life assurance is a risk.Â But it isn’t a very big one – not as big, for example, as driving a car.Â And no-one thinks young parents are mad to do that.
The calculation of risk is harder when it comes to pensions.Â It’s likely that people will be poor in their old age if they don’t put a good deal ofÂ money into a pension or some other source of retirement income.Â But that still doesn’t mean that they should.Â They may think it’s a reasonable trade-off – a life of wine and roses now, and re-used teabags and wild dandelions later.Â They may think itÂ better to invest their money in their children’s futures rather than their own.Â Or they may have soÂ many commitments to others – their own parents, for example – that they simply cannot afford the luxury of planning their own long-term financial security.
If you or I were to investigate the financesÂ of a random selection of a hundred households, I’m sure we’d find that by the industry’s standards virtually all of them were underinsured andÂ had underfunded pensions.Â But in the large majority of those cases, given the attitudes of the people involved and the shape of their overall financial commitments, I’m certain that we’d conclude that they were right to be behaving as they were.
People in life assurance and pensions are perfectlyÂ entitled to think that their products are a good thing, and that people would be better placed if they put more money into them.Â But this is just an opinion, not an objective fact.Â They have no more right to benefit from government-sponsored advertising campaigns and educational programmes than anyone selling anything else, from hair-care products to underwear.Â Like everyone else with something to sell, they should make their own case as best they can, and not expect anyone else to do their selling for them.Â Â Â