My wife says – and I suspect I can’t deny this – that I have enough items at home offered to me for nothing by financial brands to open a museum of giveaways. I have notebooks, pens, keyrings, mugs, games, mobile phone holders, hip flasks, travel card wallets, paperweights, and enough umbrellas to cover the average intermediary’s customers over a substantial time period.
Some of these come from companies that are still in business. But given the ups and downs of financial and insurance markets, the bulk are from organisations which have long disappeared. Who remembers the Life Association of Scotland? Or Guardian Royal Exchange? Or Norwich Union? Or Bradford & Bingley? Or Abbey National?
I can. But then there are the ones about which I am embarrassed to say that I can no longer remember not just who they were but even what sector they were in.
Pride of place in my museum must go to a lavish picture book called “Lost in Iceland” (the country, not the supermarket). It came from now bust bank Icesave and was presented to me by its chief executive weeks before it shut shop for ever, leaving a billions wide money chasm.
This is not a nostalgic walk down memory lane. Rather, it leads into the value or otherwise of a brand. While the concept of insurance and other financial services remains largely unchanged over the years, the names of companies providing cover, investment and banking is rarely the same one year to the next.
The big questions for intermediaries is how far does brand-awareness affect both their advice to clients and how those clients accept it? And in the advised market, is the brand more or less important than the values of intermediaries?
Companies often spend fortunes on branding – well beyond those umbrellas and other “treasures” in my soon to be opened museum of names which, justly or otherwise, have been consigned to history.
Vitality is an excellent example of a brand on the up. It has laid out big on sports sponsorship, television advertising, and, yes, Stanley the dog (plus soft toys). Stanley is actually Alfie, a trained dachshund with a big following of his own. This can’t be bad for Vitality or its South African parent company, Discovery.
It probably has one of the top brand recognitions in the protection market, equally helped by a huge number of deals and gimmicks. There are discounts on bicycles, fitness trackers, and, of course, the points for activity that lead to Vitality Rewards. Just as London’s Victoria and Albert Museum was once marketed as “an ace caff with a museum attached”, Vitality was seen by some as “cheap gym membership with insurance attached.”
Somehow, intermediaries have to convince clients that all this is noise – unless it is clear Vitality is right for the individual. This can mean that on top of expertise in all things protection cover, they might have to discuss the merits or otherwise of gym membership or whether customers should buy a bike through Vitality’s link-up with Evans Cycles or via Cycle to Work. It’s not clear – at least not to me – how talking about the plus or minus of these benefits works with the rules on what brokers must and must not tell prospective customers.
In advising clients to go elsewhere and still maintain them on their customer list, intermediaries have to tread a careful path between perception of the brand and what they would see as its reality – that a particular label is not right for a client.
But things can go wrong in the world of brands. Sometimes on the turn of a sixpence (5p coin is the nearest equivalent). Equitable Life is a good example. While largely depending on its own salesforce rather than advisers, it had built up a formidable reputation for reliability and probity over some 200 years. No one needs reminding how that went in a comparative flash.
An even better (or quicker from hero to zero) example is the current Woodford fund management fiasco. This has not only locked in investors. It has severely damaged trust in Woodford cheer leader Hargreaves Lansdown and wrecked the concept of the “star fund manager” – at least until the next one is created.
What can go wrong for Vitality? Currently nothing but could it have expanded the brand too far from its protection roots? It now offers a Vitality stocks and shares ISA. If that fails to deliver, it could harm the brand – no matter how distant the protection people are from investment or how many cuddly Stanleys it offers.
Saga, which counts private medical insurance in its portfolio, is the opposite of Vitality. Its brand has seen better days. Extended from what was a holiday company for the over 50s into all manner of financial services, its one time boast that it could offer greater value to its target group no longer works in these days when everyone gets a personal quotation. If Saga could once claim better property cover for older people as they were more careful, now every insurer knows this and sets premiums accordingly.
It believed too much that its 10 million strong database was unique. Yes, it is wealthy and yes, it was expanding. But how many of this number – a large proportion of the over 50s – were equally on other lists? And Saga failed to capitalise on whatever it had.
The firm’s 200,000 mainly small, initial investors at flotation five years ago – including many Saga customers – have lost three quarters of their money while other insurers have made gains. These losers will tell their friends. And those friends will pass the message on. The shares have been mercilessly pounded. The products no longer enjoy anything special. Policyholders are less willing now to recommend the brand. I know it’s an old joke, but Saga really has gone gaga.
While this does mean Saga no longer has a unique selling proposition to a desired (and expanding) group, it equally does not mean Saga protection policies have anything wrong with them.
Ultimately, brand value is in the eye of the beholder. Advisers have to be aware of this – but also realise their own value and power.