Ten years on since the financial crisis, there has already been a great deal of focus and contemplation on how financial services have changed over the past decade. For many consumers, banks are still distrusted, not helped by mis-selling scandals or paltry returns on savings accounts.
There has been a notable shift in not only how we interact with our finances through technology, but there’s also been a shift in consumer attitudes too. For many customers, the best price will always triumph. However, others are factoring in the reputation of companies and importantly where these organisations are investing their savings, pensions and investments.
There have been high-profile figures who have called for institutions to divest their pension schemes from fossil fuels, including the Archbishop of Canterbury Justin Welby and the actor Mark Rylance, but we’ve seen a growing popularity among consumers looking for ethical investments too.
As we begin Good Money Week, it is an appropriate time for the industry to encourage and raise the profile of ethical and sustainable investments.
Figures out this week from Hargreaves Lansdown show over the past decade, the size of the ethical market has grown from £4.5 billion in 2008 to £16.7 billion today. Retail investors can pick numerous ethical passive funds or ETFs. There are also cash Isas and bonds that provide guaranteed income streams too.
Several online platforms, including Ethex, are also allowing companies to raise finance for projects such as renewable energy and community housing in the UK and abroad. These can be held within the Innovative Finance ISA.
There is clearly progress and appetite, but much of the industry is behind the curve in addressing the demands of consumers. Part of this is down to how products are communicated to customers.
According to our own figures, 51% of the UK’s adult population (some 19.5m) are investing positively or are interested in doing so, yet only 39% of our customers are women. Additionally, Good Money Week’s own research has found that 58% of women do not think financial institutions understand them and their needs. More must be done to encourage these potential investors and tap this large – and growing – market.
Removing jargon and adopting language that customers can understand is one step. Improving diversity is vital too. Having more women working in financial services not only will challenge the status quo, but it will have a better understanding to what a product should look like and how it can be created. This is about understanding the motivations of the investor, not simply a number on what it returns.
Good Money Week is a great initiative for looking at investing not simply as a product but a means of supporting an issue that an investor values. In an investment marketplace which is seeing its values change in line with the new generation, and tackling these issues are going to become an increasingly important factor in people’s decisions to invest.
Good Money Week will hopefully encourage more people to look at the alternatives so in the coming years, ethical savings and investment products are mainstream options.
Lisa Ashford, chief executive officer for Ethex