Heroes Beneath Our Mutuals

Customer-owned organisations are perfectly placed to provide added value services to people who really need them, argues JOHN DEANE, Chief Executive of the intermediary division of Royal London Group. He explains why to Rowan Morrison.
Promises, so easy to make but not so easy to keep. For the financial services industry, now more than ever, if your customers don’t perceive your organisation as trustworthy, they will simply put their money elsewhere. Employees in the financial services sector are also increasingly looking to be employed by companies which demonstrate ethics and values, and where they will be nurtured to achieve their full potential.
Mutuals position themselves as offering all of these things and more – as a comforting alternative to the ‘big bad banks’ – organisations which look after your money, give you superior customer service, and all the while ensure that you feel good about yourself in the process. But are the mutuals living up to the reputation?
Best in class
It certainly seems so. This year, for instance, Scottish Life won Best Company of the Year, and Best Pension Provider at the Money Marketing Financial Services Awards. Chief Executive of Scottish Life is John Deane, one part of his role as Chief Executive of the intermediary division of Royal London Group. John is also Chair of insurance company Bright Grey, heading up the Group’s international business RL360, and Dublin-based Caledonian Life. A complex set of roles, but John has had an equally varied – and impressive – career so far.
He explains: “I spent six years with SunLife in Bristol, which became Axa. I qualified as an actuary there before joining Imperial Trident Life, which became Laurentian Life. There, I was Customer Services Director, and Assistant Director in IT, responsible for a significant programme of putting laptop technology into the sales force.”
Later, John joined private company Century Life and, in 2000, took its financial services arm to form outsourcing company Adepta which was sold to private equity in 2002.
“Then in 2003, I joined Old Mutual, where I was Corporate Development Director, responsible for the Skandia acquisition and with responsibilities in South Africa.
“I fell in love with South Africa,” John adds, “It is a fascinating country with so much potential, and I have great hope for it.”
Working together for success
He joined Royal London in 2007 and spotted equal potential in a faltering Scottish Life: “When I joined Royal London, Scottish Life was loss-making because it was simply trying to do too much. My first task was to take this activity down, so we were doing significantly less, but achieving significantly higher quality.”
The task also informed his management style. He says: “The important thing to remember when you go into a business which isn’t doing as well as it could, is to be flexible, more collaborative. It sounds easy, but it’s hard in terms of process because, when you’re tasked with turning a business around, staff perceive you as being more directive. So you’re faced with the challenge of not only changing things for the business, but changing people’s view of you.
John adds that the overriding message he’s learned in his career so far is that, if you don’t understand what’s being said at the coffee machine, then you don’t understand the heartbeat of your organisation.
“The really interesting challenge for managers now and in the future is that the nature of the coffee machine is changing,” he argues. “Many of these conversations are now being carried out over Twitter and Facebook where you don’t get to hear them. Therefore it’s even more important to connect with your organisation, to be visible.”
He has a further lesson to share: “Speaking to your staff is overvalued – listening is undervalued. Directors can forget that the vital part of real communication with their people is listening.”
But how can mutuals attract the top talent and incentivise existing employees to stay with them, if the option of financial incentive – either through equity or large bonuses – is not available to them? John is emphatic: “The perception that only private companies offering equity can attract talent is nonsense. People join and stay with an organisation because of its values, and how these values align with their own.
“People want to work for companies which visibly show the ambition and drive to be successful – companies where employees to your left and to your right are people you want to work with.
“We certainly have this culture within Royal London Group,” John adds. “It is  very rewarding to work with an excellent team to develop profitable businesses which are recognised as providing real value. This success is not an individual effort.”
What a mutual means to customers
What sets mutuals apart, certainly in the current environment, is that they appear to be tapping into a greater social need or expectation, as John explains: “The two fundamental pillars of what makes a mutual are, first, you inherit capital from the previous generation and get the benefit and security of that capital, passing it on to the next generation. The second pillar is that you don’t take out any more than your fair share.
“If either of these pillars is broken,” John adds, “then that’s the end of mutuality. If you keep the foundations of mutuality, you get an organisation demonstrating behaviours and values that offer real consistency for customers and members, for employees, and for others, such as suppliers.”
Of course, all of these factors are dependent on the approach of the people management. “Greedy people can work anywhere,” John laughs, “but at least the overarching ethos is more likely to attract people who value this approach.”
Customer perception of mutuals is another challenge, John points out. “We conducted research where we literally stopped people in the street and asked them what a mutual was.
“People responded: ‘building societies which are now banks’, which does not  connect to the state of ownership at our core. So we need to engage with the customer-owners of our business in order that they see the benefit of the mutual model. At Royal London, we make it clear that individuals have a voice. We also have to put the case for socially responsible use of this voice.”
Lasting social impact
The financial services industry has certainly suffered from short-termism in its outlook, with performance driven by the quarterly reporting process to the markets. Mutuals, which are not exposed to this, have the flexibility of looking to the longer-term and lasting returns on investments. One such investment, driven by John in his role at Royal London, is MoneyVista – an online financial planning service.
“Society needs to address a big problem which is the public not understanding the economics of their financial future,” John argues. “We know that in 40 years time, there will only be half the current number of people in work supporting people in retirement. We know that the cost of pensions will be two to three times what it is now. This is an urgent issue. There’s a debate about the role of the state, and of customer-owned organisations such as ours, in helping people to make the right life choices.”
He adds: “We as an industry can shout that the public don’t understand enough, or keep talking about how society needs to be educated about saving, or we can actually do something about it.”
MoneyVista is a subscription-based service, with the first 30 days free, where users enter data and then build and continually add to a personalised financial plan. What makes it different from other such financial advice services is that it’s not focused on debt management, instead guiding users through budgeting, and covering off concerns such as what needs to be done to enjoy a comfortable retirement, what would happen if you became ill and couldn’t work, and so on.
“We are selling products and this is what we need to think about when we’re considering our corporate responsibility,” John explains. “Yes, we can do things like painting walls and digging ditches, but where we can really play a role – what our guiding principle should be – is in protecting people. We protect people from the financial consequences of dying too young or, essentially, living too long, in terms of saving enough for a long retirement. That is real corporate responsibility.
“As a customer-owned industry, we should dig less ditches and instead, work out how we can deliver on key social responsibilities. We want to advise people to understand the implications of financial decisions they are taking. We also want to encourage consumer engagement, making it easier for people to have a voice and to be listened to.
After all, John says:“Our owners are our customers and if we don’t tell them what the financial future is, and help them to prepare for it, then who will?”