Financial Services – What’s Changed Since 1988

 

I started working for the Prudential assurance company at the Holloway Road office, I thought that we were indeed living in very modern times. We didn’t quite have the level of technology you see nowadays, for example the office only had one computer. And that was kept covered most of the time.

There were no self invested personal pensions nor were there any form of peer to peer lending or borrowing – and we certainly didn’t have any of the more creative mortgages that are around today. Sure things were far simpler then, that said the overall thinking was exactly the same. Save some of your hard earned cash in an investment area that made sense and hopefully at some stage in the future you would be substantially better off.

There was no buy-to-let market, personal pensions had only just been introduced and we were right in the middle of a property market crash. Margaret Thatcher was the leader of the Conservative Party and therefore our Prime Minister we also had the satirical TV show Spitting Images every Sunday.

The Prudential was one of a number home service companies that had survived ever since the beginning of the century. Nearly every working class person had access to a trusted advisor that collected 4 weekly cash premiums on the doorstep. These were not loan collections – these were savings.

All of those that wanted it had access to someone that could provide them with financial advice and guidance. Sure the industry will hate me for saying that, however the system worked perfectly. The man from the PRU, or the Liverpool Vic or the Pearl were trusted and respected individuals the were all known locally.

So what happened? The marketplace moved on and most of these insurance companies were replaced by electronic and automated systems. Which meant the man from the PRU was no longer needed.

Ok, the products that sold then were never particularly competitive and certainly wouldn’t be considered in today’s world as being an ideal plan. But for many millions of people these savings meant that they had some cash available at some point in their lives which paid for children’s driving lessons and important birthdays, along with making sure that money was available for funerals and at various intervals holidays and high days. Unlike today’s enforced savings, money was made available at important intervals instead of a of at retirement.

The enforced savings we have available now – auto enrolment pensions, mean that payments are tied up until retirement date and can’t be accessed before age 55. And – certainly not the kind of investment you would make if you were looking to achieve financial independence before then, and certainly not making any sense when you consider it in light of the FIRE movement we have today.

The FIRE movement is a movement whose goal is financial independence and retiring early. The model is particularly popular among millennials, gaining traction through online communities via information shared in blogs, podcasts, and online discussion forums. From Wikepedia https://en.wikipedia.org/wiki/FIRE_movement

My working area for the PRU was concentrated in a tiny part of North London, the bulk of which was a handful of large council estates. I would guess that at least half of the residents had some form of arrangement with an industrial branch company. Which meant that at least half of the people living there had some form of long-term savings. Importantly at least half of the residents had access to a trusted advisor somebody that had financial experience and was able to assist with financial and technical expertise. Sure, there was always an element of sales. There always is.

Home Service
The home service model served the British Public for many years. I guess it just became too expensive to maintain and the contracts that were available started to look a little out of place in the modern world. And things move on, insurance companies needed to evolve just because it had worked for the previous 70 or 80 years didn’t mean it was going to work looking forward.

Advice on the doorstep.
I get the fact that times have changed however making sure that individuals could get access to financial advice in their own homes on a weekly or monthly basis just makes perfect sense.

Even if they had a particularly simple enquiry it could be answered, I had many clients that made notes and stuck them on the mantelpiece or inside the payment books. To make sure by asked the question when I arrived. If you compare that with what’s available now, you can pop over to Money Advice or even the main regulator site and if you are lucky they will be able to answer the question, the reality is any of the government sponsored sites are limited in terms of the explanation and of course are not interactive. Advice, on the doorstep may seem quaint now but for many it was extremely valuable.

Everybody who wanted it had access and in their homes.

Industrial Branch
The policies and plans that were arranged under industrial branch regulations were very simple, simple savings and investment products and simple life assurance products which paid sufficient for working-class customers and their circumstances. Many of these products had been available for decades and met the needs of most. There was never any need for complexity nor is there now. In fact the industry overcomplicates what are very simple matters.

What happens when you die? What happens if you live too long? All of these questions were answered by simple industrial branch policies and the man from the PRU.

When I first came into the financial industry, in 1988.

I  started working for the Prudential assurance company at the Holloway Road office, I thought that we were indeed living in very modern times. We didn’t quite have the level of technology you see nowadays, for example the office only had one computer. And that was kept covered most of the time.

There were no self invested personal pensions nor were there any form of peer to peer lending or borrowing – and we certainly didn’t have any of the more creative mortgages that are around today. Sure things were far simpler then, that said the overall thinking was exactly the same. Save some of your hard earned cash in an investment area that made sense and hopefully at some stage in the future you would be substantially better off.

There was no buy-to-let market, personal pensions had only just been introduced and we were right in the middle of a property market crash. Margaret Thatcher was the leader of the Conservative Party and therefore our Prime Minister we also had the satirical TV show Spitting Images every Sunday.

The Prudential was one of a number home service companies that had survived ever since the beginning of the century. Nearly every working class person had access to a trusted advisor that collected 4 weekly cash premiums on the doorstep. These were not loan collections – these were savings.  

All of those that wanted it had access to someone that could provide them with financial advice and guidance. Sure the industry will hate me for saying that, however the system worked perfectly. The man from the PRU, or the Liverpool Vic or the Pearl were trusted and respected individuals the were all  known locally.

So what happened? The marketplace moved on and most of these insurance companies were replaced by electronic and automated systems. Which meant the man from the PRU was no longer needed.

Ok, the products that sold where never  particularly competitive and certainly wouldn’t be considered in today’s world as being an ideal plan. But for many millions of people these savings meant that they had some cash available at some point in their lives which paid for children’s driving lessons and important birthdays, along with making sure that money was available for funerals and at various intervals holidays and high days. Unlike today’s enforced savings, money was made available at important intervals instead of a of at retirement.

The enforced savings we have available now  – auto enrolment pensions, mean that payments are tied up until retirement date and can’t be accessed before age 55. And –  certainly not the kind of investment you would make if you was looking to achieve financial independence before then, and certainly not making any sense when you consider it in light of the FIRE movement we have today.

The FIRE movement is a movement whose goal is financial independence and retiring early. The model is particularly popular among among millennials, gaining traction through online communities via information shared in blogs, podcasts, and online discussion forums. From Wikepedia https://en.wikipedia.org/wiki/FIRE_movement

My working area for the PRU was concentrated in a tiny part of North London, the bulk of which was a handful of large council estates. I would guess that at least half of the residents had some form of arrangement with an industrial branch company. Which meant that at least half of the people living there had some form of long-term savings. Importantly at least half of the residents had access to a trusted advisor somebody that had financial experience and was able to assist with financial and technical expertise. Sure, there was always an element of sales. There always is.

Home Service

The home service model served the British Public for many years. I guess it just became too expensive to maintain and the contracts that were available started to look a little out of place in the modern world. And things move on,  insurance companies needed to evolve just because it had worked for the previous 70 or 80 years didn’t mean it was going to work looking forward.

Advice on the doorstep.

I get the fact that times have changed however making sure that individuals could get access to financial advice in their own homes on a weekly or monthly basis just makes perfect sense.

Even if they had a particularly simple enquiry it could be answered, I had many clients that made notes and stuck them on the mantelpiece or inside the payment books. To make sure by asked the  question when I arrived. If you compare that with what’s available now, you can pop over to Money Advice or even the main regulator site and if you are lucky they will be able to answer the question, the reality is any of the government sponsored sites are limited in terms of the explanation and of course are not interactive. Advice, on the doorstep may seem quaint now but for many it was extremely valuable.

Everybody who wanted it had access and in their homes.

Industrial Branch

The policies and plans that were arranged under industrial branch regulations were very simple, simple savings and investment products and simple life assurance products which paid sufficient for working class customers and their circumstances. Many of these products had been available for decades and met the needs of most. There was never any need for complexity nor is there now.  In fact the industry overcomplicates what are very simple matters.

What happens when you die? What happens if you live too long? All of these questions were answered by simple industrial branch policies and the man from the PRU.

Regulation

When regulation first arrived in 1988 and the industry was forced to separate into tied and independent advisors, there was a flurry of activity. And the likes of Abbey life and Allied Dunbar continued to promote their high priced and expensive products to support a BMW/Mercedes driving sales force. both of these companies should have been regulated out of existence –  that said they still exist but under a more modern look. Consumer choice is one thing…

Cost of regulation

Despite years and years of regulation we have seen mass mis-selling still continue in fact the level of Consumer Protection now seems to be not much more than it was in 1988. the costs of regulation are met by the product providers, these are funded by the profit from the sale of products, therefore it is the consumer that ultimately pays for its own regulation.

There is a perception that the financial regulators are good at what they do  – the reality is much of the work from the various regulators that has overseen more and more bad stuff going on.

For some reason they seem powerless to stop it. even advisors that were fully regulated and authorised by modern regulators have mis-sold on a massive scale. Along with fraudulent activity.

That’s more than a bit mad it is not acceptable and should never happen in a modern regulated financial services industry.

Old School Stuff

There are  any number of aged principles when it comes to managing money. None of this is taught in schools, none of it forms part of a curriculum in any educational establishment. There is no GCSE in Money Management.  It seems that a financial education can only be learnt once you are outside of the mainstream schools – sure I get that fact that money items are on on some curriculums.

There are a number of principles in relation to money and money management and these will probably be reduced down to 8 or 9 separate points in  a Moneytrainers seminar or workshops.

I work with these financial principles which crossover, or as I prefer – dovetail. By making sure you work with and adhere to these principles you will be able to leverage your money so that it works for you rather than it working for everyone else.  Simple things like comparing Building Society accounts on a regular basis make so much sense yet so few actually do the work.

It’s for these reasons that I work with people to make sure they understand what it is that makes the difference and how to ensure that your money works for you.

What’s Changed

In this modern life, this modern world we live in, access to information is everywhere.  What used to be made privy to just a few is now available to everyone. The changes we have  seen in the last 5 years have been dramatic with information and high quality guidance along with low-cost products on widely available — being your own financial advisor is now so easy and so straightforward.

And in support of the DIY approach we have information coming out of the financial independence movement (see FIRE above)  which is starting to transform the lives of those working with it. Being financially independent at age 35 or 40 he is now possible for everyone, sure you might need to do a little bit of work in order to get there. But it’s certainly achievable.

This financial Independence was not really achievable as a DIY option 20 or 30 years ago but it’s certainly available now and using money as a leverage tool to improve your personal financial situation is a must-do. Even if you don’t attain independence in your 20s and 30s being financially independent in your 40s or early 50s is something to aspire to.

Can you imagine not having to go to work from age 40 to 43, can you imagine having sufficient income from your investments in order to be able to live the life of your dreams and only  work 1 or 2 days per week? Hold on to that thought for a moment.

It really is achievable and many hundreds of thousands of people are already doing it.

If you are ready  get moving on this, get in touch and I’ll explain how you can do it and how easy it is.

 

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