A consumer report conducted by a watchdog organization stated nearly 40 percent of all respondents said that they will spend any where up to three hours shopping for a pair of jeans. Conversely, less than a third admitted to spending the same kind of time weighing the benefits and selecting the correct financial products in order to make an informed decision.
So does anyone really care as much about financial products as marketers think they do?
Consumers still find buying financial products complex and confusing, with mortgages and pensions regarded as the most difficult, according to an independent survey commissioned by the Financial Services Consumer Panel.
In its first annual survey 'Consumers in the Financial Market' the Panel reveals that a substantial number of consumers may be vulnerable because of their lack of experience of financial products. The survey found that:
· Most people have only purchased a limited number of financial products. While 77% have a savings account and 58% have a mortgage, other financial products have only been obtained by a minority of people. 6% of those sampled have never purchased any financial products.
· 41% of respondents considered themselves experienced with a range of investment products built up over at least 5 years, but just under one third (29%) describe themselves as not having any money to save. The remaining respondents were either relatively new to saving (in the last year or two) or just beginning to think about it.
· Few consumers shop around for financial products. Two thirds of people who have obtained a financial product in the last 12 months had only used one source of information before making their decision, and 9% received no information at all. Yet most people were confident they had enough information to make the right choice.
With this lack of knowledge consumers look for convenience in their purchasing habits and these habit relate to how products are obtained. Between 55-60% of consumers will purchase their next financial product close to a financial institution where they live. 20-25%, close to where they work. (It must be noted that large Metropolitan area are bound to a different set of purchasing habits, where work may play the dominating role.) And last 10-15%, choose close to where they shop.
Although not specifically identified in this review a continually greater numbers of those searching for financial services are seeking accounts on the web.
· Financial advisers play an influential role in people’s financial decisions. 53% of those who did obtain information seek advice from a financial adviser and they are often used as the sole source of information.
· Women are less likely than men to be 'financially savvy', less likely to be 'financially self-assured', and more likely to be ‘risk averse’. They are also less likely than men to take out investment products, life assurance savings products or personal pensions or make free standing additional voluntary contributions to a pension. However these findings are quickly turning.
· Single parent families are the group least likely to obtain different financial products and account for a quarter of those who have never purchased any financial products. Savings remain closely linked to socioeconomic characteristics.
Barbara Saunders, Chairman of the Financial Services Consumer Panel says: “This research highlights how relatively inexperienced consumers are when it comes to financial products, which makes it even more important for products to be straightforward.”
With the lack of consumer interest, and possibly the lack of financial associates product knowledge, banking has increasing become more of a transaction business than fulfilling the financial consultant role. Clients must be educated as to the benefits of future savings and financial alternatives. They must be guided through the life-cycles of financial well being. It is for these reasons it is so important for an institution to understand their product mix, their associates ability, the sales process, and their market.
It has been written that the only way to overcome any objection is to understand both sides of the equation. We have become so product and number driven we have clouded the driving force behind our business, helping clients fulfill their individual financial aspirations. This can only be completed with a sales friendly knowledgeable staff, a staff willing to work hand-in-hand with a client to help achieve their dreams and not the institutions.
So if you don’t have a sales process in place, start one... Now! It's teaching associates your products and how to listen. If you really want to differentiate your institution be knowledge and help. Walk away from “Welcome to our institution, can I take your order?”
If you would like additional information on the topic or have a suggestion for a future one feel free to e-mail me or leave a comment.
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