What price principles?

As recession hits, how much are people prepared to pay over the odds for their principles?

- Total organic sales fell by 11% in December 2008

- Tracker funds under management in the fourth quarter of 2008 were £19.8bn, down 5 per cent on £20.9bn in the third quarter of 2008, while Ethical funds under management in the fourth quarter of 2008 were £4.4bn, down 7 per cent on the previous quarter.

It will be interesting to watch consumer behaviour over the next 12 months and see if the saying ‘a principle is not a principle until it’s cost you something’ holds true.

Jim Poulter
Client Services Director

You don’t know me!

I was reading blog entries by Nigel Hollis, Chief Global Analyst for Millward Brown, one of the world’s leading research companies today.

Two entries struck me and started me thinking. One was about the all pervading (and intrusive?) Facebook. Mr Hollis was saying that most analysts believe Facebook will started monetizing data, using it to target advertising.

So my status notes I am looking forward to my trip to Nepal, and Facebook delivers me Travel Insurance ads. Handy for me, great for advertisers and even better for Facebook. A truly targeted piece of advertising. Brilliant – probably a little irritating after a while and even bordering on slightly creepy, but brilliant nonetheless.

Two weeks earlier Hollis discussed the importance of locally applicable retail, citing the FT article focusing on how the Shanghai launch of Marks and Spencer had not gone according to plan in spite of 20 years experience trading in nearby Hong Kong.

So, what can we gain from this? That some have grasped that what works in one region often fails in another…and that those who want to make a success need to start targeting (and therefore making more cost effective) their communications.

As the world supposedly becomes more global and uniform, it still seems to amaze some that highly targeted advertising, messaging and positioning is important.

Love may be the global language, but communication is by nature essentially local.

James Maxwell
Copywriter

Has Trust Gone Bust?

Opinion Leader Research are hosting a debate tomorrow night with this title and in advance I was mulling this over and the age old debate about trust (or lack of it) in financial services. You know how it goes. "How can we rebuild trust after the Equitable debacle, endowment shortfalls, dropping pension values, state run banks and large bonuses..?"

Well the answer is clear, we can't. Trust has gone bust, but not just in financial services. That's because in society we don't trust like we used to. We question governments, businesses, Drs - we check out what we are told on the internet and we make our own decisions. The only person we really, truly, trust these days is ourselves.

So, let's stop this debate once and for all. The question we really need to focus on is “How do we engage better with the Recommendation Generation?"

Jo Parker
CEO

So, what next?

In February last year I met with an IFA to discuss my financial situation. I had a lump sum I wanted to invest and wanted some professional advice. During the course of his visit he stated:

1) That he expected the FTSE to close the year at 7,200 pts.
2) That property was still showing significant signs of growth with no real evidence that it was about to drop.

Now luckily, through sheer inertia I didn't take up any of his advice and stuck the lot across two high interest savings accounts while I figured out what next?

What next was I sat down 13 months later - last night to be precise - to decide what to do with the money that's now languishing accruing 4 pts less interest than when I opened the accounts a year ago. My wife and I spent 2 hours discussing our next move - we decided agaist an IFA - we decided against taking advice from my brother-in-law (a wealth manager) - we decided against buying property, because who knows.

We ended up deciding to go to the Caribbean at Christmas, frankly there appear to be so few options out there at the moment you might as well spend it, it's devaluing anyway. Any better options will be considered and probably disregarded.

Crispin Heath
Head of Digital

How will we fund our retirement now?

The EU has announced today that compulsory retirement at 65 is NOT unlawful. This could turn into a UK law that is both short sighted and out of touch. Given that people’s pensions are insufficient (or even non-existent), the cost of living keeps on rising, and we’re living longer, why should those that are healthy and happy to work beyond the age of 65 not be able to do so? The Government’s continued and sensible policy of self-funding our retirement is fine. But it’s far too late for people in their 60s to make a significant difference to the return on their investments and secure themselves a prosperous retirement.

Either people are given the guarantee of a financially secure retirement (not going to happen any time soon), or they are allowed to continue to earn a wage if they choose to do so. Please don’t completely lose sight of the short term picture, and please help people to help themselves.

Montse Tojeiro

Who will eat the banks’ lunch?

Interesting to read this week that Tesco Personal Finance reported a near doubling of the amount of money deposited with them during the past six months. Tesco Personal Finance said more accounts were opened with them during December alone than in the whole of 2007, boosting their saver numbers up to around 500,000.They credited the strong flow of funds during the month to a particular savings account which was offered for a limited time and attracted "tens of thousands of savers". Tesco already offers savings products, loans and insurance and have plans to offer a full banking service, including current accounts and mortgages. Surveys had previously shown that consumers trusted supermarkets more than they trusted banks, even before the current financial crisis. 500,000 accounts may seem small fry, but with the chance to offer a retail experience very different to the banks and a brand synonymous with value for money, watch this space!

Jo Parker

In the shoes of income seekers

Having just spent a weekend looking at income options with my retired Mum who hasn’t a pension to fall back on – I have realised that the search for income when you are in your 70s is very stressful indeed. Firstly if, like my Mum, you don’t have a pc you have to go round to different banks and building societies by foot – and then be ‘sold to’ at each visit. You are probably not being given the best or latest deals either – so you really are e-excluded.

You are often given contradictory information – one person told her that annuity rates were the best they have been for ages – yet in the papers there has been wide coverage about how annuity rates are low.

She was told that although interest rates were the lowest they had been well since records began, that she should guard savings against inflation coming back in 3 years.

She doesn’t understand that some advisers are qualified to tell her about some products and not all (such as Lifetime Mortgages).

She was also told about a capital guaranteed product linked to the FTSE 100 available from a building society – but then told that if the asset manager who was offering it went under, she would loose any money over the £50,000 compensation amount. So it feels like no guarantee at all from where she is sitting.

And when you are in your mid 70s you want security. You don’t want to have to review your money every 6 months and trek around finding the best deal (she thinks she can’t afford an IFA by the way). In fact she feels that when things should be getting simpler and easier, her financial situation and the options available to her have never been more complex. And she is right. It is a minefield and I can tell you I am not looking forward to having to do this when I am retired - and I know a thing or two about this stuff!