I’m not sure if this is yet entirely visible in the real world, but, my goodness, the life and pensions industry has fallen in love with older people recently.Â
The astonishing success of Just Retirement has had a lot to do with it.Â I can’t remember the exact figures, but when it was floated JR turned a private equity investment of something like Â£20 million into a market cap of something like Â£800 million in something like two and a half years, which even if I’ve gotÂ the figures completely wrong is the kind of achievement that tends toÂ concentrate senior managers’ minds.
Arguably, it’s surprising that minds weren’t pretty concentrated already.Â For firms in the savings, investment and protection game, the business case for focusing on older people has been obvious for ages:Â in a nutshell, they’re the ones with all the money.Â A few years ago we saw a bit of a false dawn, or possibly diversionary initiative, when in the light of the new Child Trust Fund legislation a couple of small players reinvented themselves as specialists in the children’s savings market (The Children’s Mutual, Family Investments), but the bigger money was moving in the opposite direction.Â We’ve already seen GE Life focus on the retirement market, rebrand as Tomorrow and now sell the business on to LV.Â And in the next year or two, we’re going to see several other small and medium sized life companies relaunch with positionings wholly or largely designed to appeal to what one firm I know of, specialists in the retirement seminar market, describes as the “sea of beige.”
What’s odd is that while this trend continues to gather pace in the life industry, I’m seeing little or no sign of it in the High Street.Â Â In reality, the business model of the country’s remaining building soceties is to pull in savings from older, more affluentÂ people through their branches, and lend the money onÂ in the form ofÂ mortgages for younger, less affluentÂ people through intermediaries.Â But although some societies certainly offer very competitive “silver saver” products for the 50+ market, and one or two specialise in later-life products such as Equity Release, I haven’t seen any sign yet of any regional building societies reinventing themselves entirely as specialists in the pre- and post-retirement market.
In fact, on the contrary, in my own experience most of them are still struggling like flies in a spider’s web of lack of resource, lack of courage and lack of management capability to make themselves more “contemporary” and more “relevant” to younger customers.Â They peerÂ gloomily at dataÂ telling themÂ that young Darren’s dadÂ did indeed getÂ his first mortgageÂ from the Accrington Economic but young DarrenÂ went to a broker and finished up with the Halifax – and then wonder hopelessly what on earth they can do to appeal to young Darren when his promotional rate runs out.Â
Actually, in absolute terms, it wouldn’t really be all that difficult to make the Accrington Economic relevant to young Darren, even if only because it’s quite a small organisation with a dozen branches within a ten-mile radius of Accrington and reinventing any small organisation is easier than reinventing any big one.Â But the task is way beyond the Colins and Brians who run the society, and anyway – which is the point of this piece – it’s completely the wrong thing to do.
The right thing to do is, au contraire, to make the society even more relevant and comfortable for the Colins and Brians and Malcolms, as well as for the Janes and Margots and Audreys.Â Ban all type sizes of less than 12-point.Â Introduce a suite of autumnal corporate colours (including beige).Â Offer special motor insurance discounts on Honda Accords.Â Display leaflets on Savings for Grandchildren (not for children – they’re all over 30 now).Â Become specialists in IHT planning.Â Provide chairs where customers out shopping can have a rest.Â I could go on with more or less patronising suggestions, but I think I’ve made my point.
I really, really worry about the prospects for the remaining regional building societies.Â Only a tiny handful seem to have the vim and vigour to execute a survival strategy – the large majority look like brain-dead organisations that will come to the end of their natural lives at approximately the same rate as their existing customers will.Â PartÂ of the reason for this is that they are horribly resource-constrained.Â ButÂ in truth, that’s a very small part.Â The much bigger issue is thatÂ most are still looking for a survival strategy – if indeed they’re looking at all – in completely the wrong place.Â Â Forget younger and funkier.Â Be glad to be grey – or beige.