The financial services industry needs to advise on, package, and design propositions that are more targeted, educational, and adapted to the financial goals and concerns of every lifestage, according to GlobalData Financial Services.
Product design and financial advice are lacking for consumers at every stage of life. Propositions need to target life stages, from advice on how to save to buy a house, right through to retirement and minimizing the impact of inheritance tax.
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Opportunities exist for all financial services players to enhance and develop propositions that fit consumers’ needs. This is relevant across all areas, whether it is savings or investment products, bank accounts, or protection insurance.
No longer should consumers be analyzed on an individual basis. Instead they should be targeted with financial services based on their lifestage and households, as individuals are rarely financially independent. Often they will have a partner, children, or parents with whom their finances and needs are linked.
It is crucial to understand the lifestyles and finances of families and households to understand their protection needs and how to target them.
All have different financial goals, concerns, and situations. Products should be marketed to appeal to and address these. Consumers must be kept at the heart of financial services and be understood holistically.
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By GlobalDataLack of awareness
There are many existing financial products that can already serve customers well; however, they may either not be packaged effectively, or there is a lack of awareness and education around them.
For example an investment product could be marketed specifically for those saving for a house, or income protection could be marketed for renters. This easily highlights to customers that a product is relevant to them.
Financial products must acknowledge and appeal to the changing needs and lifestyles of consumers over time, for example through flexible life insurance that can be adapted at key lifestage transitions such as buying a house, having children, or retiring. There needs to be a greater focus on serving customers over the long term.
The industry also needs to work on improving customer engagement with financial services and building financial resilience.
Individuals must believe they can influence their finances, and they need to be given the tools, education, and advice to know how. Advisers must additionally do more to understand a customer’s needs and assess which products will be most relevant and beneficial.
The financial services industry needs to work together. For example banks and advisers could help customers in their goal to buy a house, and then work with insurers to sell protection when they get a mortgage.
Working together will help serve customers holistically across all products such as savings, investments, lending, and protection insurance. Serving customers better from all angles will help customers achieve greater financial resilience.
There are 26.7 million families in the UK who could be better served. There is a great opportunity for the financial services industry to see the holistic customer and put this into action.
GlobalData’s upcoming report Protecting the Financial Needs of Today’s Households addresses these issues. It segments consumers into eight lifestages, analyzes their financial health and dynamics to discuss their protection needs, and highlights how to target them.
