Investing in consumer trust

Justin Taurog, VitalityInvest Deputy CEO

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Apr 18, 2019
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Consumer behaviour and habits have changed over the years, powered by technology in particular, which has given people immediate access to wider choice and greater control over their decisions. In the case of financial services, customers are far better informed of the products, providers and adviser services available today. 

The myriad of new investment platforms, savings tools and products that have popped up in recent times have made it easier to switch between providers. Choice, and decisions to switch, are in turn informed by product innovation, simplicity, rates of return and fees. We have moved on from the days of lifelong brand loyalty. 

Technology aside, trust and transparency have come into sharper focus, particularly since the last financial crisis. Trust sits at the core of most social relationships and is foundational to the relationship between clients and investment professionals. 

While some customers may still remain loyal to a brand they have been with for a long time, be it from a product provider or service provider, it is still instructive to ask what the priorities are for customers and where they see real value today.  For the majority it seems that the most common concerns, when it comes to growing and preserving their wealth, are the fees and the rate of return on their investments. This is evidenced in a recent report published by PwC[1], which outlines the top three concerns as: 

- Poor returns on savings (at 37%)

- Overcharging and inappropriate fees (at 31%)

- Excessive risk-taking by investment managers (at 30%) 

The report also highlights that 46% look for greater transparency in products and services – suggesting a lack of faith in providers’ integrity. Levels of consumer trust in retail banks and financial advisers stood at 32% and 28% respectively, while fund managers were down at a mere 12%. To a large extent, this was due to personal experiences of dealing with people within these organisations – as stated by 19% of respondents in the case of fund managers and 30% in the case of financial advisers. While returns and fees remain a central concern, clearly a lack of trust is a major hurdle to winning and retaining business – particularly when individuals have the option of DIY or robo-advised solutions. However, at the same time, these findings could represent a massive opportunity for financial institutions that manage to demonstrate their trustworthiness.

As a new investment proposition in the UK, VitalityInvest has been asked a number of interesting questions that demonstrate the importance of trust in financial institutions to advisers and their clients. Key among these is an assurance that Vitality is committed to the advised UK retail investment market for the long term.

Our decision to launch VitalityInvest was, in every sense, an extension of Vitality’s core purpose, namely to help make people healthier and enhance and protect their lives. So, where the protection business looks to insure people against the financial consequences of death and illness, the investment business helps them to prepare for their future retirement.

As a financial services organisation, the trust of our customers is pivotal to Vitality’s business – without it, we wouldn’t be able to offer people the credible assurance that we do. With this in mind, we only enter into lines of business where we believe we can make a positive difference to people’s lives, and where we can commit to the business for the long term.

And while we may be a new entrant to investments in the UK, our parent company Discovery is not a newcomer to the investment sector. Our Invest proposition has been run successfully for over a decade, first launching in 2007 in South Africa. Through the experience we have gathered, we were able to refine our value proposition to the UK market, based on evidence of its sustainability and ability to create customer value. Mindful of the need to demonstrate our credentials, we partnered with leading investment firms Investec and Vanguard to provide the fund management that underpins our proposition.

We believe engaging with customers on a behavioural level is key to establishing trust. Building a system of rewards and benefits into a product, which delivers low fees and boosts to long-term returns, ticks the box of building financial aspirations and helping customers towards achieving their long-term financial goals.  We believe this approach makes the job of the adviser easier, because the investment review can go beyond fund performance.

For customers, it seems that while products and fees are crucial, being able to rely on the provider is a critical consideration. Financial companies that deliver on their promises by returning value are able to demonstrate alignment with their customers’ objectives. Doing so is the first step to overcoming the negative stereotypes often associated with the sector. Building trust in this way will benefit their customers’ advisers long-term business development too.

For more information, go to https://adviser.vitality.co.uk/investments/ 


1 https://www.pwc.co.uk/assets/pdf/fsrr-consumer-survey-final.pdf


Go to the profile of Vitality

Vitality

We’re the first insurance company to reward people for healthy living. We aim to be the best at what we do, offering comprehensive and award-winning Health and Life cover and positively different investments to our members. We believe in the idea of ‘shared value’: we help you take a more active role in managing your own wellness, which can encourage you to develop healthy long-term habits that are good for you, good for us and good for society.

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