Since this book calls for more of something called ‘good’ marketing, and less of something called ‘bad’ marketing, we're obliged to say something about what these terms mean – and, particularly, about how they apply to financial services.

We stand behind our big-picture conviction that in a consumer society, marketing – that's to say, identifying and satisfying consumer needs – is fundamentally a ‘good’ activity. And we strongly support the maintenance of a strict robust regulatory regime that, as far as possible, prevents ‘bad’ marketing and punishes and penalises those responsible for anything that slips through the net.

But many people argue that for one reason or another, marketing is different in financial services – that there are special considerations, specific problems and challenges, that apply. We want to examine these alleged differences between marketing in financial services and in other sectors. What are they? Do they stand up to scrutiny? And do they make a real difference?

There are four that are highlighted most often, and, simply put, we don't really buy any of them:

1. It's often said that there is an ‘information asymmetry’ between financial services providers and their customers – or, to put this clumsy expression into plain English, that consumers understand a great deal less about financial services that the companies providing them. This is certainly very often true, but it isn't at all unusual. People understand very little about the workings of computers, or cars, or central heating boilers, or microwave ovens. There is no fundamental difference in the level of knowledge or understanding. However, there is a visible difference in the ability of marketers to make these things accessible to, and usable by, consumers. Very few of us have the faintest idea how ABS braking systems work, but we do know that we can stand on the brakes on a wet road without skidding. We don't need or want to know how these things work – we just need to know what we need to do to get what we want out of them.
2. Two overlapping points are often made to argue that financial decisions are trickier than other purchase decisions: it's said that they are more important, with more serious consequences if you get them wrong, and also that it's often impossible to tell whether they were good or bad decisions until many years have passed. It's obviously true that some financial decisions are more important than some non-financial decisions – it doesn't much matter if you choose a not-very-good packet of paperclips, but it matters like hell if you choose a not-very-good pension. And it's also true that you often have to wait a long time to find out how well some financial products perform: it takes a lot longer to be sure you bought a good investment than to be sure you bought a good holiday. But neither of these issues is in any way unique to financial services. Getting any big, expensive, important decision wrong is a nightmare – a property, a partner, a business venture. And while plenty of financial products don't have long-term time horizons (motor insurance, credit cards, instant-access savings accounts), plenty of non-financial products do (cars, carpets, pets, thatched roofs, fitted kitchens, spouses…).
3. A similar, but separate, point is often made, having to do with frequency of purchase. Consumers frequently buy pizzas and shampoo, it's said, and practice makes perfect. There are several financial products that they buy only once in a lifetime: no wonder they don't know what they're doing. Again, at the extreme – pizzas versus pensions – this is obviously true. But there are plenty of other products and services that most of us buy very infrequently – divorce lawyers, lawnmowers, GCSE coaches, loft conversions. And of course there are some financial products we do buy relatively often – most insurance policies have to be renewed every year.
4. And finally, many people claim that consumers are uniquely unengaged with financial services, finding the whole subject exceptionally boring and confusing and wanting to spend as little time dealing with it as possible.

   We strenuously reject this idea for two reasons. First, if they do find us boring and confusing, that's our problem and not theirs, and we can fix it whenever we want to – there's nothing inherently boring and confusing about money (the memory of Margot Robbie lounging in a bubble bath while explaining credit default swaps from the film of Michael Lewis's book The Big Short comes to mind).

   And second, when people say this, what do they imagine that consumers spend the rest of their time dealing with? Lifestyles of decadent, self-indulgent hedonism dedicated to the pursuit of pleasure? Or days like most of us have most of the time, trying to get a new tyre fitted to the car while still being on time for the school run, booking someone to come and have a look at the leaking shower and querying a horribly high data-roaming charge on the latest mobile phone bill? Frankly, after a day of routine domestic chores, an hour spent planning the home of our dreams or looking forward to our retirement could quite possibly come as light relief.

But there's a fifth alleged difference that is less easy to dismiss, and which we think gives marketers in particular more food for thought.

In retail financial services (in fact perhaps in some sectors more than others) there are important players in and around the industry who believe fundamentally in the principle that consumers must always be provided not simply with a good solution, but with the best possible solution to their particular needs.

The list of these important players include those in and around the financial advice community, for whom providing consumers with the best possible solution is of course the raison d'être. It also includes our principal regulator, the Financial Conduct Authority: trying to ensure that consumers get the best possible solution for their particular needs, whether they've taken advice or not, lies at the heart of the regulatory agenda in the retail market.

And then further afield, there's a much broader constituency of media, lobbyists, consumerists, and indeed many in senior positions in the industry who all believe broadly the same thing – that any process that does not lead to the best possible outcome for individual customers is a process that's fatally flawed.

This point of view clearly depends on a key assumption, that the best possible outcome for a consumer in any given situation is in fact knowable, and measurable against some objective standard. This is, to say the least, a questionable assumption. Best outcome how? Best performance? Lowest risk? Cheapest price? Best fit with needs at the time of purchase? Best fit with needs 20 years after the time of purchase? You might imagine that the enormous difficulty in reaching any kind of definition of ‘best’ would bring the whole theory into serious doubt. But somehow, it doesn't: those who support it go on to argue that the ultimate aim of the retail financial services industry must be to make sure that this standard is met as often as possible.

Of course if you take this view, you have to conclude that marketing in financial services is indeed very different from other parts of the consumer economy, where customers pay their money and take their choices. There is no other sector in the market economy where the aim is to provide customers with the best possible outcome.¹

If there is an objective standard of suitability for each customer and for each financial decision, then the role of marketing, and marketers, becomes by definition massively restricted. We effectively find ourselves back in our box as the colouring-in department, concerned merely with the presentation of choices made on our customers' behalf by people with much higher pay-grades.

So how well does this idea of an objective standard stand up to scrutiny?

We can safely disregard the views of those with too much in the way of vested interests. For example, you can see why those in the advice community feel the way they do: for one thing they wouldn't have jobs otherwise, and for another the whole idea of ‘best advice’ is integral to their sales process and gives them a great way to close the sale. Similarly, it's hardly surprising that those at the Financial Conduct Authority responsible for consumer protection favour the idea of optimal outcomes: they would, wouldn't they?

But as we move into an era much more driven by consumer choice, it's important – albeit difficult – to challenge this assumption, and acknowledge that the concept of the optimal outcome doesn't really make much sense anymore. The outcome that matters now and in the future is the one that appeals enough to consumers to encourage them to choose it over the principal alternative – and more often than not, the principal alternative is not doing anything.

This is a big and controversial point, best made by example.

A few years ago, one of your authors was involved in developing a protection proposition to be distributed by direct marketing. The product was named Well Woman insurance, and did what it said on the tin – it provided life insurance for women, paying out on deaths resulting from a list of illnesses suffered only, or predominantly, by women. Premiums were very affordable, and the cover offered a lot of peace of mind, especially to women with children. It sold well.

Industry commentators hated it. They pointed out that the conditions it covered were uncommon, and accounted for only a small proportion of deaths: the product, they said, lulled women (and their families) into a sense of false security. The product should be banned, they said. Instead, women (and men) should be encouraged to buy comprehensive life insurance.

A phrase that comes to mind remarkably often in financial services marketing is that ‘the great is the enemy of the good’. It may well have been that objectively, our target market would have been better served with a comprehensive life protection product. On the other hand, it would have been a good deal more expensive – for many, unaffordably expensive. And, no less importantly, it wouldn't have been possible to promote it with the kind of highly targeted, emotionally engaging direct marketing communication that Well Woman was able to achieve. Objectively, our target market might have been better suited by a different kind of product – if they had decided to buy it. If they hadn't decided to buy it, they'd have had nothing, and it's hard to see how they'd have been better suited by that.

Take another example, and one that in fact has to do with an advice business. Over the years, both of your authors have had a great deal to do with the marketing of the leading wealth management firm St. James's Place. St. James's Place is a firm that has been the subject of controversy in the industry, partly for historical reasons that needn't concern us. Currently, the criticism most often heard is that compared to other firms, St. James's Place's charges are high. Consumers, it's said, could get better value elsewhere.

There's plenty of room for debate about the figures, but let's set that aside. The more important point is that St. James's Place clients are delighted with the service they receive, and, almost without exception, happy and proud to be clients of the firm. Hardly anyone has ever made a complaint about value for money. St. James's Place is unashamedly a premium brand, and in much the same way that you can stay in hotels a lot cheaper than the Connaught, you can probably get financial advice cheaper than from St. James's Place. If you believe there is an objective standard of suitability in financial advice, and that cost is an important component of that standard, then you wouldn't choose St. James's Place. But hundreds of thousands of SJP customers, whose needs are met supremely well, would strongly disagree.

In fact, as far as premium pricing is concerned, our criticism of today's world of financial services is not that some firms' prices are too high – we'd argue that there is currently nowhere near enough of it. In a world where huge numbers of consumers choose to pay premium prices for products that– in reality or perception, or both – offer a better experience and therefore better value for money, financial services offers exceptionally few opportunities to do so. Few of us go out of our way to eat our meals in the cheapest possible restaurant, or to drive the cheapest available car (something called the Dacia Sandero, by the way) or to wear the cheapest available shirt. Most of us have some perception – even if a fairly hazy one – of the spectrum of prices available, and choose a price level somewhere in between the lowest and the highest. Some will choose the cheapest, and some will choose the most expensive. Some think the Dacia Sandero offers outstanding value. Others think the same of the Rolls-Royce Phantom.

What we're saying here is that within a tough regulatory framework that keeps the cowboys at bay, we think it's necessary to get over the old-fashioned, paternalistic idea that the experts know best and the customers should do what they're told.

Of course we welcome the existence of experts, whether they're providing one-to-one advice or something much more widely available. (We suspect that Martin Lewis's Money Saving Expert brand has probably saved consumers more money that all the IFAs in the country put together.) We also welcome the way that digital, and in particular social media, makes it so much easier for customers to reality-check their financial decisions. And if people want to meet the cost, in both time and money, of taking individual advice that will arguably lead them to what is objectively the single most suitable product or service on the market, then good luck to them.

But on the whole, this isn't how we go about making our buying decisions. For one thing, as in our examples above, our decision-making doesn't just reflect objective criteria. We are happily and proudly subjective. We're looking for emotional benefits and satisfactions just as much as rational ones – indeed, often much more.

And anyway, most of the time, most of us just don't care that much. The great American polymath Herbert Simon coined the word ‘satisficing’, a hybrid term crossing ‘satisfy’ with ‘suffice’, to explain the way that most of us make most of our choices: simply put, most of the time life's too short to aspire to perfection, so we make an investment of time and effort that seems sufficient to give us a good prospect of a good outcome (and a very unlikely prospect of a catastrophic outcome), make our decision and move on. This way of working doesn't sound right to classical economists, who believe (or did until recently) that we are rational beings whose natural inclination is to achieve so-called ‘optimal’ outcomes. But most of the time, in the real world, we aren't, and we don't.

This kind of pragmatic decision-making doubtless causes great distress to experts, not just in financial services but in every field. It must grieve IT experts to see us buying the wrong computers, and holiday experts to see us choosing the wrong hotel in the wrong destination at the wrong time of year. We drive the wrong cars, live in the wrong houses and very often marry the wrong people and have the wrong number of children. At the same time, we also get literally hundreds if not thousands of smaller choices wrong, eating and drinking the wrong things, going to see the wrong films, buying the wrong clothes, washing our hair with the wrong shampoo.

Yet, somehow, we more or less muddle through. We enjoy most of our holidays. Our cars get us from A to B. Our families give us pleasure and happiness most of the time. Our hair doesn't look too bad. This is how consumer-driven markets work. As financial services move in this direction, it's increasingly how they'll work, too.