Financial services is still “horrendously jargon-filled” despite years of improvements and this is putting people off engaging with their financial needs, according to Standard Life.
However, the provider noted people who did break the barrier and tackle their financial circumstances had higher confidence and better outcomes than those who did not.
Standard Life head of propositions Neil Hugh made the points at the Corporate Adviser Summit, while discussing the firm’s latest consumer research on financial wellbeing.
He noted that conducting the research at the start of the year had found a lot of people “feeling quite vulnerable, going through financial hardship with the pandemic and really struggling”.
And the complexity in the industry was not helping people to address their financial wellbeing.
“We are in a horrendously jargon-filled industry,” Hugh said.
“Loads has been done over the last few years but there is so much more to go and people don’t want to come near us because it’s so jargon-filled.”
He added that making decisions about what products they should have or decision to make was just too overwhelming.
“People are scared to actually get into that, that complexity and that difficulty is why we’re seeing this cycle of financial unwellness with them all quite connected,” he said.
Instead, Hugh highlighted that financial wellbeing should not be around products, but “how you get people into a state where they feel secure, they’re empowered”, and that confidence was a key word.
He noted people were often conflicted between their long-term and short-term goals.
“If we are going to get people engaged, more confident and empowered we’re going to help them with those short-term goals to get them to the long-term ones,” he continued.
Planning and confidence
Encouragingly, Hugh revealed the survey of 5,000 people found when people planned more they were more confident about their financial decisions and ended up happier later in life.
“There were real clear messages from everyone in retirement that they wish they’d planned more, also the people who had done a lot of planning were a lot happier in retirement,” Hugh said.
“That’s a really nice statistic, it shows that planning, the confidence that comes with it really does shine through.”
It was also notable that people in retirement had typically not done any planning around care costs.
For people yet to reach retirement, of those who had done financial planning 50% had confidence in their decision making, but of non-planners only 16% had confidence in their decisions.
This was somewhat reflected once people reached retirement, with 89% of those who had planned enjoying retirement compared to 78% of non-planners.
“Everyone’s enjoying retirement and it’s a great place to get to, but that planning, that confidence they’ve had seems to be coming through,” Hugh added.
Valuing key decision points
Results also showed differences among various populations with men across all ages seemingly more confident than women, although that could be a result of male over-confidence.
Hugh noted there was some correlation in regard to the gender savings gap and that people who could most benefit from advice and financial planning were not actually using it.
“So that’s a really concerning situation for us,” he said.
“How are we addressing that? How do we really begin to educate people more on the value? How do we look at some of the key decision points that maybe different across the genders – that maybe more important for males than females in terms of divorce, bereavement, coming back from maternity leave.
“That’s an area we really do need to go looking into more and we’ll be following on with further research,” he added.