FR: Having worked in financial services for almost a decade, what are the major positive changes you have seen in the industry over the last few years?
There is now a much greater access to a range of products and most recently (possibly because of the easily accessible route to brands via social media), there has been a greater focus on client communication and transparency, which has been needed for quite some time.
The finance industry has also become savvier with creative approaches to financial products such as crowd-funding in particular; which is great as long as the communication and transparency element of the product is a main focus.
FR: ...and the negatives?
In my experience, many times I have seen rewards for short-term thinking and behaviour, which has created a generation of finance professionals who are driven to achieve short-term targets at any cost. This obviously has an effect on the end consumer and has no-doubt contributed to the mis-selling activities that we’ve seen come to light over the last several years.
This culture of moral hazard has become profligate through the financial sector and means there is often a ‘disconnect’ between those taking the risk and those bearing the consequences.
FR: You recently talked about the ‘distrust’ young people have of bankers; do you see this changing? What does Blackbullion do to counteract this?
There is distrust and then there is a healthy cynicism – the conversations I have with young people fall mainly into the former. We encourage the second and are trying to eliminate the first.
Distrust amongst financial sector can have significant consequences for both the individual and on a macro level. The view of an individual against the system is corrosive and many people of all generations forget that a healthy stock market & a healthy financial system are in everyone’s best interest.
We can’t blame young people for this ‘distrust’; they’ve seen deliberate mis-selling (PPI), market manipulation (LIBOR) and ‘sure investments’ giving virtually no return. On the other hand, we’ve witnessed bankers taking hefty bonuses, the bail out of the banks which has then led to redundancies as well as the young watching their parents lose money and watching retirement funds drop in value quite considerably – it’s quite difficult to blame them for perceiving the financial system as corrupt.
The perceptions are changing – slowly. At Blackbullion we take our responsibility to be honest very seriously and try to present a common sense approach to money. It is more important to understand the financial landscape than it is to understand specific products.
- We demonstrate how interconnected everything is – the fragility of the financial ecosystem and how we are all connected within it.
- The consequences of our decisions and how every decision we make, not just the financial ones, impact on the ‘us’ of today and the ‘us’ of tomorrow.
- We weave common sense ‘rules of thumb’ into all our sessions and avoid jargon, which only serves to complicate matters and make (often) simple ideas incomprehensible.
- If something is too good to be true it must be carefully examined.
- We try to impart the importance of reading the small print which is often where the big catches are – this could have prevented many people from being caught in the PPI situation.
- A more knowledgeable population is also more difficult to hoodwink which is why empowering a society though financial capability is so important. Of course that does not negate government’s responsibility to protect the vulnerable. Raising financial capability standards can have the effect of raising the bar of vulnerability.
FR: What do you predict for consumer confidence the next 12 months?
I predict that consumer confidence will remain static for the next 12 months and then start to tick upwards by small increments.
I envisage retail closures to continue as the consequences of austerity meet a change in consumer shopping habits. Household bills, petrol & travel increases are undoubtedly going to hit families hard, add the media reporting ‘doom and gloom’ into the mix and we’re likely to see consumers reigning their finances in even further. The downgrading of the UKs credit rating is also likely to activate a layer of unnecessary desperation to an already worried population despite many not being aware of what the downgrading means however, this shows just how caustic the negative feedback loop can be.
However I believe we will start to see a small uptick by the end of the year for a number of reasons:
- The UK is brimming with potential and the possibilities, for those who are prepared to work for it are unprecedented
- People get “bad news fatigue” and at some point will start to ignore the news
- In the race between greed and fear always bank on greed
- Britain’s focus on entrepreneurs, through start up Britain and the start up loans scheme coupled with the sex appeal of Dragons Den and The Apprentice, will reach a tipping point where people will enter private enterprise to give it a go. They won’t all make it and many will never grow beyond one or two staff but since small businesses are the engine of growth I think we are on the cusp of a revolution.
FR: If you could choose one financial product that everyone should have, what would it be and why?
I’d choose an ISA. If you had been saving into an ISA since the concept was introduced you would have saved over £190,000 and it would be completely tax-free. If the money had been invested it could be worth as much as £1million according to FundExpert.co.uk.
An ISA is both flexible enough so people feel they are maintaining control over their savings but has just enough penalties that savers will think twice before withdrawing funds.
FR: If you weren't delivering financial education to our younger generations, what would you be doing?
I loved Private Banking but creating a new business helping people to genuinely improve their lives and the lives of their children is a very satisfying endeavour. I am fortunate that I love what I do and love watching people as they recognise the power and opportunity they have in their hands
If I wasn’t doing this I would be interested in creating an entrepreneur exchange for women. I am lucky that I have a small circle of mentors helping me grow and develop Blackbullion but I am disappointed that there were no women to join the circle. It is not that there are no female entrepreneurs but financial services are still predominantly male. I would be interested in creating a space where women in professional services could share best practices, ideas and when possible, collaborate. 88% of businesses in the UK employ less than 10 people – if half those businesses hired one more person we would have no unemployment... There is huge potential for small businesses to make a huge impact.
Vivi Friedgut, a former investment banker, now educates Britons aged under 35 about personal finance through her company Blackbullion which is described as 'independent future capability company dedicated to empowering young people to take control of their financial destiny'.
