The new financial services marketing requires us to make a lot of changes. Many of them are detailed in the following chapters. Some are changes that need to happen within marketing departments, and in the way that marketing people think and act. Some – generally the more problematic ones – need to take place more broadly, across financial services firms as a whole. They affect other departments, sometimes even all departments. And a number affect the thoughts and actions of senior management.

But the way we look at it, there's another kind of change that's needed. It's a kind of change that isn't really about specifics, although specific examples can be given. It's a change in the way that retail financial services people need to think about their customers, and about what it means to do a good job for them. It's a need to reconsider the balance of power, or the balance of authority, between industry and customer – a need, in the simplest and clearest terms, to recognise that in a genuinely customer-centric industry, the people on the inside really cannot go on acting on the basis that consumers are ignorant, stupid and prone to foolish behaviour, and therefore can be patronised, and treated with little respect, and need protection from the consequences of their own folly.

Few if any financial services firms – or individuals working in them – are likely to acknowledge that they think of their customers in this way. On the contrary, the very large majority say just the opposite. It's hard to find a firm that doesn't claim to be ‘focused on our customers and their needs’, or, more succinctly, to ‘put its customers first’. We think there's often not a lot of truth in these claims. But even when there is, we still think the industry is prone to putting its customers first in a remarkably patronising way.

Back in the Mad Men era, legendary advertising man David Ogilvy warned the industry about its tendency to patronise with his famous comment: ‘The consumer is not a moron, she is your wife’. Sixty years later, the gender bias in his words doesn't read well, but otherwise it's still a point that needs making to many in financial services. In a similar way, a present-day agency that has worked with one of your authors calls itself Mother, to remind its people of its raison d'etre. Would they be proud to show their mothers their work?

Several of the ideas that appear in this chapter also appear at various points elsewhere in the book. Even so, we think it's important to bring them together in one place to make one point with the maximum possible impact: we must not continue on the assumption that when our ideas are out of line with our customers, we're right, they're wrong and it's incumbent upon us to change their minds. If good marketing is about anything, it's about taking customers as we find them, and working with them as they are, not wishing – or, even worse, wrongly imagining – they were otherwise.

If it means anything, taking people as we find them must first mean getting to know and understand them well. Very often, this is made harder by the fact that our customers aren't much like us. Most of us in financial services earn much more than most of our customers, for a start. (Sometimes, of course, the reverse is true – the clients and prospects of some wealth managers and private banks earn very much more.) We start off on the wrong side of an empathy gap that takes some bridging. See if you can figure out what's going on in this anecdote.

A number of years ago one of your authors was working with Yorkshire Bank, trying to solve a mystery. Even during the busiest periods, many customers would join long queues in their branch to withdraw cash rather than use the ATM in the wall outside. Bank and agency staff couldn't understand it. Was it the Yorkshire weather? The friendliness of the counter staff? The length of the queues outside? It was none of these: the reason was that the machines dispensed only £10 and £20 notes and customers, managing their money carefully (particularly toward the end of the month), wanted to withdraw precise amounts – say £12 or £17 – to avoid overdrawing. That was possible only at the counter.

What follows is effectively a critique of a few of our most sacred cows, for which – since killing seems rather out of keeping with the spirit of our times – it would be a good idea to see if we can find new homes a long way from the industry.

1. Customers are absolutely right not to trust us.

   Actually, it's not just us. They're right not to trust more or less everything and everyone, except on a very limited and highly selective basis. That doesn't mean to say that everything and everyone is untrustworthy, but the risk is high enough that people are wise to stay on their guard. As the late, great Groucho Marx said, ‘The most important thing is trust. If you can fake that you can fake anything’.

   Chapter 14 deals with the subject of trust in more detail, and develops the idea that trust comes in several different shapes and sizes. But for now, let's just say more generally that when we talk about ‘restoring consumer trust in financial services’, what we really mean is ‘restoring consumer trust in our financial services’.

   A moment's thought brings home the unlikeliness of this. If, say, a customer is (rightly) suspicious of every telephone call or e-mail purporting to be from a financial institution, why should any one company's messages be exempt? And, more important, would it be a good thing if they were? If scammers found a way to circumvent that institution's security process, the consumer's lack of trust would be the last line of defence.

   And anyway, people in the industry don't really mean that sort of trust. They mean they want people to accept unquestioningly that the propositions they're putting forward would be good for them. Consumers would indeed be idiots, given previous experience, if they believed that.

2. Education isn't the answer.

   Many people in financial services – including many marketers – have spent much or even all of their careers dealing with professional and/or business customers. You can often engage with groups like these in a fairly sophisticated way. They may well understand your propositions as well as you do – sometimes, even, rather dauntingly, better than you do. The engagement with them can be (or at least can seem to be, which isn't quite the same thing) a left-brain affair, an intelligent conversation dealing with the facts of the matter.

   When people used to this sort of engagement find themselves dealing with mainstream consumer audiences (by which we mean anyone, young or old, affluent or not, who is not a member of the small segment who are exceptionally engaged with financial matters), the culture shock can be enormous. Suddenly, they're dealing with people who don't understand any of the concepts that could be taken for granted among the professionals. It's not just that these people don't understand the jargon – they don't get any of the simplest financial concepts. They don't know what a percentage is. They don't understand the idea of a share, or a bond or a dividend. They've never heard of an excess on an insurance policy.

   It's not surprising if the first thought of industry insiders exposed to real people like these is that if only they could just be taken away for a few years and educated about all this stuff they don't get, then they could come back and we could start having a sensible conversation.

   However, this simply isn't going to happen. Dealing with consumers means dealing with them as they are, on their terms and at their level, not waving a magic wand so that you can address them on yours. Consumers understand financial services about as well as they understand computers, phones and cars, and maybe a little less well than they understand food, travel and electrical appliances. None of these sectors engages with consumers perfectly – we don't subscribe to the view that everyone's brilliant at engaging with consumers except those of us in financial services. But they all fundamentally understand that the solution does not lie in getting their subjects added to the national curriculum so that future generations will know what they're doing.

   On the whole, people get satisfactory outcomes when they venture into other market sectors like these mainly because those responsible for interacting with them do so on their customers' terms. Computers are probably a lot more complex than pensions,¹ and so understanding how they work would be a lot more difficult than understanding how a pension works. But understanding how to get a computer to do what you want it to do is generally a great deal easier than understanding how to get a pension to do what you want it to do – and that's because of what the IT industry has done to connect with its customers, not what customers have done to connect with the IT industry.

   There's nothing wrong with education, and nothing wrong with seeking to improve financial literacy among young people (although judging by the difficulty we now have in remembering what we learned at school about photosynthesis and inert gases, we wonder quite how accessible people's learnings about, say, mortgage repayment vehicles would be at the moment when they needed them maybe 10, 20 or even 30 years later). But education is emphatically not the way to make our customers easier to engage with.

3. The expression ‘Financial services are sold and not bought’ is hugely misleading.

   To be clear, as things stand it is often the case that financial services are sold and not bought, especially those financial services that don't meet an immediate or obvious practical need, and/or are very complex (like pensions). But even though it's often factually correct, there are two reasons why the expression is so hugely misleading.

   First, it creates the impression that this is some kind of natural order of things – the sky is blue, water is wet and financial services are sold and not bought. It isn't a natural order of things at all. It's a choice we've made in the industry, to make these products available more or less entirely through salespeople, and to make them so complicated and difficult to understand that very few consumers have the confidence, expertise or indeed stamina to buy them without help.

   The second and more infuriating reason why the statement is hugely misleading – indeed damagingly so – is its underlying assumption about human nature and human motivation. It's not explicit, but there's a clear implication that we don't choose to buy these things because we're feckless wastrels. We need the intervention of noble and clear-sighted financial salespeople to focus us on what really matters and save us from our profligate natures.

   This may be good for the self-image of salespeople, but in every other way it's absolute rubbish. The idea beloved of financial services people that our customers are ill-disciplined hedonists and spendthrifts, foolishly flinging their disposable incomes at hard liquor, gambling, foreign holidays and immediate gratifications of one sort or another is a travesty of the truth. Very few people live their lives in the same way as that hugely talented but equally hedonistic footballer George Best, who of course famously said: ‘Most of my money went on women, booze and fast cars. The rest I just wasted’. Most people spend most of their incomes on the absolute essentials of daily living – food, utilities, running a car, rent and mortgages – and a big chunk of what's left on necessary evils like getting the car serviced, new shoes for the kids, work-related travel and prescriptions from the chemist. If a small fraction of the family's income is spent on a meal out, and/or a holiday, and/or a Sky subscription so that the family's football fans can watch a game together, is the financial services industry really so joyless as to say that's wrong?

   This is another of the big respects in which we look at the consumers in our marketplace, judge them and find them wanting. We will never be able to rise to the challenge of marketing the products and services we have for them until we stop doing this.

   The next two sacred cows are smaller relatives of this very big and troublesome one.

4. No financial service – not even life assurance – is an unquestionable good.

   This is to do with an idea that falls directly out of the previous one, and so is just as mistaken. In the industry, there's a remarkably widespread belief – arguably more than a belief, almost an article of faith – that many of the propositions we have to offer (life assurance is the example most often cited, at least for families with dependents like young children) represent a completely different and indeed objectively better kind of expenditure than any of those hedonistic pleasures to which consumers so often succumb. Buying life assurance isn't a choice or a preference: it's a duty. You're not discharging your responsibility to your family if you don't buy it. Some say there should be a government campaign encouraging or even possibly compelling people to do the right thing by their families, just as there has been for smoke alarms and seatbelts.

   Sorry, but, again, rubbish. Life assurance is a perfectly good product. It has the advantage that it's one of the few financial services which, according to research, typically costs a lot less than people expect. There are undoubtedly examples of families for whom a life assurance payout was hugely beneficial at a terribly difficult time. And the strong consumer suspicion that life assurers will do everything they can to wriggle out of making payments is completely misplaced – a tiny proportion of claims is declined. All in all, we have nothing against life assurance at all.

   But in a world of strain on household budgets, the idea that it somehow belongs in a different category of expenditure from kids' shoes, a family holiday or a Sky subscription makes no sense to us at all. All of these items, and countless others, represent choices about how to use some of the available money – to use the old-fashioned language of classical economics, about how to optimise utility. As in all consumer markets, you can find a segmentation to explain the choices that different people make. It may be that the particularly risk-averse forward planners put life assurance at the top of their list. Those who choose the family holiday may be…well, they may be hedonists, but they may just be people who work long hours and worry that they're losing touch with their children. And what if those ‘kids' shoes’ are actually new football boots for a child selected for a trial in the County under-13s?

   Accurate figures are not available, but the number of parents aged, say, under 40 who die in any given year is tiny – a small fraction of 1%. (For a more compelling statistical argument, forget about life assurance – younger parents are much more likely to need Critical Illness or Income Replacement.) The real reason that many in the industry prioritise life cover is that it's a nice easy sell and it's not very expensive for healthy young people: any half-competent salesperson should be able to wind up the emotional temperature so that prospects would feel intense guilt if they declined. But the reality is that it's just another direct debit fighting for a place on the consumer's bank statement.²

5. The huge majority of people will never voluntarily put enough into long-term savings.

   Of the items in this list, this is probably the most widely recognised. But it's still important to draw attention to it – both for itself, and also because of what it says about our evasiveness and reluctance to level with consumers and tell them how things are.

   The reality is that even if everyone now in an auto-enrolled pension stays in it as their contributions increase up to the maximum level of 8% in 2019 – and we strongly suspect that opt-out rates will increase quite sharply as people realise the implications for their incomes – it's still likely to fall a long way short of providing the sort of income in retirement they want and expect.

   Of course the outcomes for individuals will depend on what happens to that cluster of ageing-population issues that include retirement age, investment growth, life expectancy and the cost of care. But still, on any reasonably imaginable assumptions, it's true. And, by the way, over the next 30 or 40 years or so, while millions of people are coming up to retirement with pots that are half-full, quarter-full or even less, outcomes will be a good deal worse. We haven't served consumers well in helping them envisage the reality of retirement in the new era of Defined Contribution pensions and rising life expectancy and healthcare costs, and it seems sure to lead to a lot of trouble.³

6. We have to get better at understanding what customers really value from us.

   When we think no-one's looking, we've shown a remarkable ability to snaffle large amounts of our customers' cash in return for things that no-one – or at least very few people – value. PPI compensation is coming up toward £40 billion and counting. Some of the charges we've levied on banking, insurance and investment products – while never tripping over into full-scale mis-selling scandals – take the breath away.

   But if we could just get a bit smarter, understand our customers better and segment our markets more intelligently, we could create far more positive, win/win situations where customers get something they value and we get to make money as a result.

   PPI is in fact a good example. Lurking beneath the overpricing, opaque sales practices and mis-selling to customers ineligible to claim on their policies is a perfectly good product. A significant proportion of borrowers would value this kind of insurance and would be quite happy to pay a fair price for it.

   Elsewhere, we're convinced that there are great opportunities in many financial categories for premium products that offer high added value at much higher than average prices. We can hardly think of a consumer market where this isn't the case, and which can't be represented as a classic triangle where a large number of consumers buy at lower prices on the lower slopes, and a small number of consumer pay top dollar at the top.⁴

   We're not thinking here specifically about services for people who have a lot of money. Of course there are plenty of these, especially in the areas of investment and wealth management. Of course there are examples of premium financial services brands, and some are very well known. You'd expect an account at Coutts to cost more than a High Street bank, and indeed it does. But there aren't many. If you draw up the pyramids for the various sectors of the market, you'll discover that the bases are very broad, and the peaks very narrow.

   There's a reason for this, which is that a lot of influential people in financial services seem remarkably uncomfortable with the idea of a premium brand. The clearest example of this discomfort is probably vertically integrated advice firm St. James's Place. If you asked people in the industry to characterise the firm in one word, they would probably choose ‘expensive’ (or in two words, ‘too expensive’). If, on the other hand, you surveyed a sample of St. James's Place customers, scarcely a single one would mention price. Instead, 98% would say something extremely positive – SJP has what may be the highest client satisfaction scores of any firm of its kind. What's happening here, as with so many of the points in this chapter, is that people in the industry are determined that they're right and consumers are wrong. We wonder if the same industry figures would also encourage people to stay in the cheapest hotels, eat in the cheapest restaurants and drive Dacia Sanderos.

   In this particular case, the industry's insistence that it knows better than its customers is costing it a fortune. On the whole (with some exceptions), premium products sold at premium prices are more profitable than vanilla products. By failing to recognise consumers' preference for something better than the basic, we're depriving them of what they want – and ourselves of some good business.⁵

7. If it's not easy enough, it's not good enough.

   A lot of people who work in financial services, especially in senior roles, are financially very sophisticated. Some, indeed, are actuaries. This means that their brains work quite differently from ordinary people's. It means they are capable of getting the best out of complex financial products that baffle and alienate most of us.

   The same issue arises in every highly technical field. In the early days of home computing, when software as we now know it didn't exist, if you wanted your primitive Sinclair ZX80 to actually do anything – perform simple arithmetic, say, or play a game of noughts and crosses with you – you had to start by writing a programme to tell it how to do so. Most of us found this difficult, boring and far more trouble than it was worth. After a couple of failed attempts to write the 20-or-so lines of code in the noughts and crosses program, we put our primitive machines away, vowing never to even look at them again. It wasn't until several years later that Bill Gates came along and invented Windows, and we started to get interested again.⁶

   The problem was obvious in hindsight. The capabilities of the machines were far too inaccessible for any more than a tiny segment of people to appreciate. If we'd all been cleverer, or keener, or had less of a life, we could all have had a lot of fun writing BASIC code and playing noughts and crosses to our hearts' content. But that's not how it was, and very, very few of us wanted anything to do with computers until clever Mr Gates, and equally clever Mr Jobs, made it easy enough for us to cope with (at least most of the time).

   The same applies to many of our most ingenious ideas in financial services. The best single example is the flexible, or offset, mortgage. We're not going to get into an explanation of these clever but very complicated products – too many readers will glaze over, or, more likely, just give up and go check their phones. But, believe us, for most people who need a mortgage and also have savings, an offset mortgage is an absolute no-brainer. Over the course of a year, it will leave you hundreds if not thousands of pounds better off. There is no downside.

   Except…

   They're complicated. Offset mortgages are hard to get your head round. There's weird new jargon involved, like overborrowing. And when you've mastered that, you have to do stuff. You have to move money in, and out again, on a regular basis. You can't just leave it and set up a monthly direct debit. You have to work to make money.

   So, inevitably, most of us can't be bothered. We have a look at a brochure or a website, don't get it, don't understand these overborrowings, and decide we'd rather have an ordinary mortgage.

8. On a similar subject, we really could start using language a lot better.

   It's not just all the jargon, and all that dreadful, stilted, dead financial language. Firms have at least been trying, with some success, to get rid of the worst of that for a long time now. But to be honest, what has taken its place isn't much better. It's always dangerous for authors to embark on the pot/kettle challenge of criticising writing styles, but can anyone think of a single firm in retail financial services that really uses words well? Can you name one whose writing you could describe as a pleasure to read? Or even one that has a consistent tone of voice that you'd be able to recognise?

   To be fair, there is an emerging generation of digital services making fresh attempts to tackle this problem, and the result is a new kind of digital writing that is fairly different from the old-time off-liners – more conversational, more natural, shorter, smarter. Only thing is, again, within its category, it's all the same. It's difficult, or indeed impossible, to distinguish the tone of voice of any one of these new digital brands from any other.

9. Digital comes first, and mobile comes first within digital.

   Talking of emerging digital brands, this point isn't news to them – but it's still big news to many others. Overwhelmingly, with only a few exceptions, the established players in the industry still conceive of financial services on paper. Even when they aim to make them accessible digitally, they still typically envisage digital pieces of paper. Think of an online bank or card statement: most are just offline bank statements viewed on a screen. The coming of digital was about more than saving money on stamps.

   While that's been apparent for a long time, the supremacy of mobile is emerging with great speed. Too many firms are still starting on paper, then optimising for computer, then optimising for phone. Going forward, it has to be the other way round.

Some readers will have found little that's new in the mini-harangues in this chapter. ‘For goodness' sake’, we hear some saying, ‘does anyone really think education might be the answer’? Sorry if you were one of them. But even if you were already up with the individual points, or most of them, we think that together they still deliver a collective message: that if we're going to get better at marketing, we really do need to think more honestly, more realistically and more perceptively about our customers.

Research shows a widespread sense among consumers that the financial services industry really doesn't ‘get’ them – that while the front-line staff in branches and call centres are often pleasant enough, the people that you don't get to see belong to a slightly different species that may have been quite well briefed on ordinary life but hasn't actually experienced it.

This feels uncomfortable to consumers, and it must also have damaging consequences for the industry. Some of our biggest and smartest ideas can just miss the mark, go off half-cocked, never really find the market for whom they were intended.

Going forward from here, getting rid of that gap between industry and customers is going to mean getting rid of a long list of the clichés, assumptions and items of received wisdom which shape so many of our thoughts about real people living in the real world. Tackling the small selection in this chapter would be a good place to start.