FIRST WORD: Editorials: Edition: June / August 2020

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Virus of views

No shortage of opinion. Mark shortage of prescience.

Understandably so, but not terribly helpful.

Confusion is a hallmark of the Covid-19 crisis. Widespread amongst savers of all stripes, it’s a function not only of the fright induced by a world turned upside down but also by a failure in consumer financial education that’s supposed to provide context and comfort through historical and

knowledgeable perspective.

Instead, late in the day for reassurance, the stay-athome lockdown has delivered a captive audience for

the electronic bombardment of opinions. So grossly was it overdone, relative to choices and time available, that the volume and frequency of communication

perhaps became inversely proportionate to their value and impact.

There’d been occasions when, on a single day, there were invitations to three finance-related webinars each of 90 minutes. All seemed too tempting to miss. All, from the various samples, could have been shortened to fractions of their time. None were equally brilliant and few weren’t promotional. Clearly, some put more effort than others into preparation and presentation of content.

Much the same applied to emails, unfocused and untargeted for relevance to the recipient. Arriving daily in gigantic swathes, straining to stir interest by introductory references to Covid-19, they frequently provided less information than irritation.

People were so busy putting out their own opinions – be it through the proliferation of social media, radio talk shows or digital platforms whose space limitation is infinity – that they were averse to heeding others. Broadcasting had become narrowcasting, between an elite in intellectual hubris on the one hand and a hoipolloi in seething frustration on the other.

Particularly when overweight on opinion, “communication” is not an end in itself. This has surely become evident. Within this “communication” category, the crisis should have shown at least two things:

The novelty of Zoom conferencing and webinars wears thin. Zoom is a poor substitute for developing contacts, reading body language, conversing spontaneously or enjoying lunch. For the sake of human interactions and warmth in relationships, may the long-term effect of Zoom on the travel and hospitality industries prove marginal;

For all the effort and expense over the years to stimulate consumer financial education, there’s little to show for it. That much is evident from the streams of queries to retirement funds, their sponsors and administrators.

In the retirement-fund space, these observations converge where they illustrate that technology advances (of benefit to the few) have outpaced educational applications (for distribution to the many). Mostly, say those at the receiving end, questions being put are basic in their innocence and boring in their repetitiveness.

With the huge shock from the March market collapse, and deep fears for an insecure future, there’s unprecedented sensitivity by individuals about the appropriateness of their savings products. There’s desperation to access retirement funds and frustration at barriers to do so. Panic mode reflects consumers’ lack of preparation, in turn the consequence of poor communication – a two-way street between telling and listening.

Now, when jobs are lost and salaries cut, families are flummoxed. Why can a breadwinner borrow from his pension fund to buy a house but not food? How long will it take the regulatory authority to approve amendments to fund rules, if indeed it will approve them, to allow cash redemptions while hunger stalks?

What will be reasonable drawdowns from annuity products, and the wise time to go on pension, when markets veer at extremes of volatility? Advisers are expected to provide answers, to the extent that there are answers, as best they can. It’s one thing to offer sweeping generalities about sticking to financial goals and not selling out as markets crash. It’s another to face clients with the reality of having to dampen their income expectations.

In the frenzy for advice, impeded by the impossibility of scenario planning, money managers and their clients will need to engage more consistently and effectively with one another. The trick will be in getting clients to show consistent interest, irrespective of market conditions; certainly more interest than they do, for example, in electing trustees for retirement funds or bothering about the investment mandates produced on their behalf.

This trick, to counteract the apathy which gave rise to default savings options, is unknown. Perhaps the Centre for Development & Enterprise has the key. It’s producing a series of policy reports entitled: “Are wen asking the right questions?”

Allan Greenblo, Editorial Director.