ISA Season Failing Due To Pensions Freedom

Published: 27 March 2015

With the introduction of pension freedoms, people are becoming less interested in the classic savings product, the ISA.

While ISAs are heralded as fairly simple to understand products, pensions, and the incoming changes to how pension savings can be accessed, are anything but.

What’s happened to ISA Season this year? With savers and investors rushing to make the most of their annual ISA allowance before the tax year ends, this normally coincides with a flurry of related media commentary across national money sections and consumer websites.

This year though, the usual crescendo of noise hasn’t quite materialised. This was temporarily arrested last week when the Chancellor announced the introduction of the Help to Buy ISA, in order to get more prospective first time buyers on the housing ladder, and new flexibility around moving money in and out of cash ISAs. But a look at two leading publications reveals an interesting split. In the last 30 days, the Times has mentioned ‘ISA’ 81 times, compared to 364 times for ‘pension’. In the Financial Times it is 41 v 240. Unscientific perhaps, but you get the picture.

There’s one very good reason. Another key pillar of personal finance, pensions, is about to undergo some fundamental changes to the way people can access their retirement savings. Ever since the Chancellor declared in his 2014 Budget that no-one should have to buy an annuity, 6 April 2015 has been looming large. Given that the impact on people at, or approaching, retirement will be profound, it’s perhaps no surprise that coverage of the changes has dominated the media’s attention.

But while ISAs are heralded as fairly simple to understand products, pensions, and the incoming changes to how pension savings can be accessed, are anything but. Here lies a potential stumbling block. Because too often, financial services speak finds itself mired in jargon. From AERs and basis points to uncrystallised funds pension lump sums (UFPLS – no, I don’t know either), too often the industry confuses and loses people who just want things explained plainly. There’s a wealth of research showing that when it comes to their finances, jargon and complexity is one of customers’ biggest bugbears.

This poses an important communications challenge. Ditch the industry speak and explain issues to customers in a way that resonates with them and their lives. This is easier said than done, especially with products and services that are, by their very nature, complex. Financial services firms also face a number of regulatory hurdles which must be cleared. But a good communications campaign can meet those guidelines and offer simple answers to the following questions:

1. What is happening?
2. Why now?
3. What does it mean for you?
4. What next?

Above all, ask: am I really telling the audience what they want and need to hear? Or am I simply telling them what I want to say? If it’s the latter, it’s back to the drawing board.

There’s no one-size-fits-all approach to getting communications right, but building a framework based on these principles is a good starting point.

Tom Yazdi
Senior Consultant

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Tom leads projects for Grant Thornton International, Bovill and Canada Life. He has a diploma from the PRCA.

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