Intermediaries should help clients with their financial affairs, writes Phil Whitehouse, head of The Mortgage Alliance (TMA)
The controlling of household finances and budgets is an area in which a certain degree of knowledge, organisation and control is needed.
Some possess these qualities but many do not. This isn’t a criticism. Some people are simply not good with money, some are too good – we all know the one’s I mean – some just live for the now, some have the mañana, mañana attitude and some genuinely don’t have the time.
With this in mind it was with a curious combination of worry, interest and excitement that I read an article which reported that 17 million adults (35%) have admitted to neglecting their financial wellbeing and of these people, one in five (21%) say their debt levels are too high to feel financially secure.
The second annual Scottish Widows Priorities of Life Index shows that of the 17 million adults who cannot focus on their finances as much as they’d like, 21% said this was because they had too much debt to feel financially secure, 32% are not paid enough, and a quarter (25%) simply try not to think about money in their day to day lives.
Around 19 million people (38%) said they are focusing less on their savings than they would like, of which 11 million (60%) commented that this is because they can’t afford to save more than they currently are. Six million (33%) only focus on their short term finances and 11% of all Brits said the one thing they wish they had more time for was for planning to save for their future.
Whilst there are lots of tools and expert advice available to help in such areas, these worrying statistics appear to suggest that too many people are not devoting enough time and/or attention to their long-term financial situation. Or could it simply be the case that they are intimidated by the perceived complexity attached to managing a budget and a regular stock-take of household budgets? If so, cue a good professional adviser to help support this process.
One of the most interesting statistic in the research is that six million (33%) only focus on their short term finances. This is particularly interesting as it appears indicative of the modern mentality and again with a nod to the intermediary market this is something we have to try and work hard to help some clients overcome.
In connection with this I also mentioned an element of excitement attached to these results. The excitement is in the potential that this lack of time, understanding and sometimes apathy that people have in managing their finances brings. With reticence and some degree of ignorance often comes opportunity but in order to capitalise on these, intermediaries must be proactive in targeting such people.
Surely intermediary firms should be looking at research like this through marketing eyes and using such material to question their client base and potential new clients on how they can help support them in the upkeep or updating of their financial affairs. One way of supporting this process is through the assistance of technology. A compelling online proposition with an integrated online consumer platform can provide a great vehicle for intermediary firms of all sizes looking to get the most out of their existing client databases as well as attracting new clientele. A successful online platform will allow intermediaries and their client’s access to a number of new areas of financial management as well as opening up a host of income generating openings through ancillary sales. This is in addition to the host of marketing opportunities it can also help bridge.
Of course technology isn’t the be all and end all. Targeting the right people is key to making this work but as illustrated in this research there are vast numbers of potential clients out there who are in need of such advice and support. Financial planning meeting can help open a number of doors to ancillary products such as buildings and contents, general insurance, life insurance and even areas such as wills. Fortunately good, professional intermediary firms remain in pole position to help people overcome this neglect and set them on the path to some degree of future financial wellbeing.