Can marketing communications make a difference when more fundamental issues remain unresolved? cchm:ping Joint Managing Director Paul Gordon investigates.
In the last issue of Invisible Brand we ran an article by Lucian Camp that looked towards Pensions A-Day as a potential catalyst for exciting and effective new advertising campaigns in a sector that has been starved of investment and creativity for many years.
A-Day has arrived and the scenery is changing. But not for the better. Only recently, the Government has been in trouble over allegedly misleading advice about the security of company pensions schemes. The withdrawal of Final Salary Schemes by companies and institutions has accelerated. The government is no longer hiding its agenda to raise the retirement age, having held roadshows all over the country asking, in effect: "What would you do in our shoes?"
That's not all. The Government took pensions providers (and the public) most of the way down the aisle over investment in residential property before jilting them at the altar. The industry is furious and out of pocket. The public is bemused and confused and, in some cases, out of pocket too.
If "downmarket" means "poor" (which, of course, it very often doesn't) then banks aren't very interested either. More than one big bank has been playing for some time with a segmented pricing model which aims to offer "discouraging" pricing to poor customers (in other words, charges that are so obviously excessive and unreasonable that the customers vote with their feet).
MISSING THE BOAT
And more: a booming stock market should have put a shine back on pension fund statements and begun to unwind the shortfalls. Except for the unfortunate fact that pensions funds are now required to buy up increasing quantities of increasingly scarce and expensive long-term bonds to match long-term liabilities - to the detriment of their equity exposure. And, of course, there is the small matter of the Chancellor's swingeing tax on funds that are supposed to exist in a tax-free environment.
If this sounds like a political polemic, it isn't intended to. It's simply to emphasise that, if we thought the Equitable Life scandal had done all the damage possible to the credibility of pensions, we need to think again.
CHALLENGES FOR PROVIDERS
In a climate of uncertainty and distrust for a whole product category, what kind of campaign can individual providers run to differentiate themselves and generate business? No matter how creative, insightful and impactful the work, the real risk is of an underlying message that suggests the deckchairs on the back of our Titanic are better than those on the back of anyone else's Titanic. Yes, we hear the target audience musing, but what about the ice?
Does this mean that what we really need is an industry-wide campaign to remind us all of the unique benefits that, despite the adverse publicity, genuinely deserve recognition? That here is a way of saving for retirement that will entitle you to up to 40% tax relief on your contributions? That your money will grow in an almost tax-free environment? That you can take out up to 25% tax free when you retire? That you can now have a totally flexible approach to retirement, tailored to your individual needs? The answer to this, I am sure, is "yes". In parallel, we need to remind our target audience of the context, as the Government is seeking to do through its roadshows. This pensions crisis thing is not going to go away. We're all going to be living longer than our ancestors but if we're not careful we could end up, in our dotage, a lot poorer than they were.
ADDRESSING THE TRUST ISSUE
If the industry is going to tackle this thing properly, it needs to do so on at least three levels. The first is an industry-wide campaign to promote the very real generic benefits of saving for retirement through pension schemes compared with almost any other savings vehicle; and the necessity for doing something, because doing nothing is not an option.
On the second level there will be marketing campaigns by individual providers. The market for pensions is potentially enormous, but a realistic market share can only be achieved by an effective combination of brand, sales and marketing, and powerful communications.
But, given the seriousness of the issues highlighted at the beginning of this article, none of these activities is likely to be fully effective without a third level of engagement. And that is comprehensively to acknowledge and address the issues of TRUST. I say issues (plural) because this third level has two facets - rebuilding trust (where that is possible) and managing distrust (where, more commonly perhaps, it is not). These are, of course, two sides of the same coin.
REINFORCING THE PROPOSITION
If we accept that Trust in investment products generally (and pensions specifically) cannot easily be rebuilt within existing terms of reference then some lateral thinking is needed if progress is to be made.
Moving on from our analogy of the Titanic to one of cars, none of us wants to set out on a journey in one - however comfortable and speedy - whose wheels are reputed to fall off before the destination can be reached. You might reconsider this car if the manufacturers announced that they had looked into past problems and the thing was now totally robust. But you'd be far more inclined to buy one if they also offered you a warranty that guaranteed a roadside pick-up by a chauffeur-driven limo within minutes of the breakdown, free repairs and a replacement car whilst they were undertaken.
We may not be able to go back to the heady benefits of the Final Salary scheme. But it surely cannot be beyond the wit and undoubted expertise of the industry to devise some kind of insured element to underpin consumer confidence in the value of funds built up within a Money Purchase Scheme. Yes, there would be a cost attached - but it could well be a cost consumers are willing to pay if it provides them with more certainty about their future. There was a time when With Profits came close to inferring such a warranty. Unfortunately that is now history. The industry can certainly build on that experience but it should not go back to past mistakes. For consumers seeking a reason to believe in pensions once again, it's time for a fresh initiative to reinforce the proposition.
MANAGING EXPECTATIONS
Much as the industry might wish it were otherwise, most wise heads accept that a significant majority of would-be retirement planners will never again offer unquestioning trust in their products. For some consumers, a product with a robust, third-party-guaranteed warranty might be the means of overcoming their reservations. For others, the cost or complexity of the product may simply provide fresh cause for scepticism. This scepticism isn't going to go away, but it can be acknowledged and addressed in a grown-up manner: "If enhanced product potential is going to involve me in increased risk, please warn me, in terms that will allow me to make a reasoned decision. If this product really is rock-solid, I'd be delighted to hear it - just so long as you don't try to contradict that in the small print."
In short, it must be expected that most retirement planners will commence their consideration of pensions propositions by looking for the catch. But even if distrust colours the approach, that does not mean it will stand in the way of a purchase: "Be straight with me, and I may well decide to deal with you. If you lie to me or cynically distort the benefits, you've lost me for good."
In conclusion, it seems evident enough that managing distrust by honest management of expectations has to be the way ahead. But this is most emphatically not a matter of telling the Compliance Department to get the nitty-gritty right. It's a matter of recognising the importance of clarity and honesty at the very heart of the marketing proposition. Now there's a fresh idea.
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