How will millennials engage with the financial services such as mutuals and how should we engage with them? CS Healthcare's Russell Stephens discusses the way forward using a recent study.
Do any of us have a real insight into the way in which we as an industry should communicate with a demographic whose first question when buying any product is often ‘what's in it for me'?
If a recent research study exploring people's understanding of the concept of mutuality and the way in which we engage with mutual societies or ‘friendly societies' is anything to go by, we as an industry have something of a challenge on our hands.
The study, undertaken by YouGov for the Association of Financial Mutuals (‘AFM'), revealed that millennials were far less likely than other age groups to have engaged with a mutual.
The study revealed that 24% of 25-34 year olds are the least likely to hold a product with a financial mutual and don't plan to in the future; however 16% said they may consider doing so.
That such a percentage of respondents is alert to the benefits which a financial mutual may offer its members should be encouraging for all of us working in Financial Services.
Not least as the AFM study revealed that as many as 33% of British adults had never even heard of a financial mutual, with a further 17% having no idea what a financial mutual is.
One of the big challenges we see for the financial services is the way in which we engage with those who have grown up using various social media to share their experiences, and the need to overcome the way in which we have traditionally spoken to this group.
We are perhaps all guilty of neglecting this demographic, looking upon millennials as a less fertile target group, and we have as an industry failed to develop products and services to meet their particular needs.
We were established as a financial mutual as long ago as 1929 and it has certainly taken us longer than it should have done to rise to this particular challenge.
However in more recent times we have careful consideration to the needs of this audience, the unique challenges they face and the kinds of products which may appeal to them.
Last July we introduced a new private health insurance plan, HealthBridge, designed to bridge the gap between private provision and the NHS.
We had millennials very much in mind when we started to research our market, to identify which features they would most value in a state of the art plan, and to establish what they would be prepared to pay for such cover.
Cost is a particularly important consideration at a time when many are trying to balance a number of competing priorities, including for many the repayment of a student loan and making their first step onto the housing ladder, with their first home likely to cost many multiples of their salary.
With the cost of comprehensive cover continuing to rise, the introduction of the new plan allows us to cater for a broader range of budgets, providing quality cover for those at different life stages.
We know that many younger professionals, in the earlier stages of their careers, wish to make private healthcare provision. The AFM research study identified real interest among this important segment of the population as to the benefits we as a mutual in particular can offer.
Millennials are generally ready to take on the world, and many consider themselves indestructible.
We in the protection business may find ourselves engaging rather less with this valuable audience than those marketing investment products and banking services.
But if we are to prosper as providers it is vital that we do rise to the challenge and respond to the needs of a group which shares a very different set of values and which is growing up with a reward culture.
This is a group which will ask you ‘What's in it for me?', ‘What else do I get with the deal?' or who will ask ‘Why bother?'
This is interesting for a mutual - 25% of respondents in the AFM study stated that they would be more likely to do business if they knew their loyalty would be rewarded.
As a mutual we are shareholder-free, have a greater sense of fairness towards our members than those serving shareholder interests, and show a much greater focus on the longer term interests of customers.
We see a fantastic opportunity to educate and engage with this important younger audience and believe the values associated with the concept of mutuality will resonate with this group.
While it is clear that we need to work much harder in reviewing the way in which we communicate and engage, the opportunity should be clear for all to see.
Russell Stephens is director of marketing, distribution and membership Services at CS Healthcare