Is personalisation still an empty promise in financial services?

Lucian Camp is a financial services brand consultant, copywriter, author and blogger.

A current TV commercial for a pension provider promises to treat me as an individual – to create a solution that’s tailored to my needs, and my needs alone.  It is, of course, about the 45,000^th financial services commercial to deliver a version of this proposition.  And, therefore, it’s about the 45,000^th financial services commercial to raise two questions in my cynical-consumer lizard-brain:  a) do I think this is true, and b) is it really something I want?

These questions are surprisingly hard to answer definitively, mainly because the more I think about it the more unclear I feel about what the proposition actually means.  In what way, or ways, is this solution specifically tailored to my needs?  Is it in big, important ways like the composition of my investment portfolio?  Or small, cosmetic ways like the font chosen for my quarterly statements?  Or something in between?  Or all the above?

If it’s about the big, important stuff, then I have to say I have my doubts.  Do the fund managers on the brink of making a big investment decision really stop and say, “Hang on a minute Neil, we’ve got a chap here saying he reckons this AI business looks a tad overcooked – should we keep him out of Palantir for the time being”?  It doesn’t sound likely.  But even if that’s exactly what happens, is it what I want?  For one thing, I’m not at all sure that I want all that much attention to be paid to my strange and random quirks and prejudices.  And for another, even if I did, I know it’s going to be expensive.  Sharing the cost of managing my money with all the 20,000 other investors in the fund feels affordable.  Bearing the full cost of humouring my eccentricities sounds absolutely prohibitive.

Perhaps, though, it’s all just cosmetic – the kind of superficial tailoring that doesn’t really make any difference, but which enables me to choose, so to speak, whether my satnav speaks to me in the voice of Sean Connery (J. Bond) or Arthur Lowe (Capt. Mainwaring).  I suppose that could be quite fun, especially if my surname happened to be Pike – but would I really stake my long-term financial security on an amusing widget that does funny accents?

So I think we can dismiss the options at both ends of the tailoring spectrum pretty quickly – implausible and expensive at the left-hand end, and silly and cosmetic at the other.  But of course as with all spectrums, the real choices aren’t between the positions at the two extremes – they’re between all the options in the middle.  Surely there must be some tailoring possibilities here which are plausible, affordable and motivating?

Well, you know, in my line of work it doesn’t really do to fail to rise to a challenge, especially when what’s being challenged is my imagination.  But to be brutally honest, I’m not sure I can think of very many.

There is of course the whole attitude-to-risk thing, but that can’t be it because that’s a mandatory part of the process which the regulator won’t let you do without.  And the same is true of the equally slippery idea of capacity for loss.  There could be some opportunities for tailoring around the optimal use of tax wrappers, especially when a couple’s different individual circumstances create some room for manoeuvre, but I doubt whether many asset managers would want to venture into such treacherous tax-planning waters.    And as I said a couple of paragraphs back, there may be some manageable ways of adjusting the investment strategy – a couple of years ago it was all ESG, now it’s all unlisted debt – that can at least create the illusion of tailoring even if the large majority of clients’ funds are tailored exactly the same way.

But I can’t think of much else.  And, I have to say, the ads and marketing material from the providers don’t help much either.  All too often, they come on hot and strong with their top-level tailoring message, but fade away into a slightly embarrassed silence when it comes to the for-instances.

This little conceptual tussle – in which the potential power of tailoring and customising comes into head-to-head conflict with the cost and efficiency benefits of one-size-fits-all solutions – represents a current round in a battle that’s been going on at least since Henry Ford invented the production line, and probably a lot longer.

120-odd years later, there’s no sign of a winner.  Rich people are much more likely to choose to pay more and get something genuinely bespoke.  Less rich people are much less likely to pay for a hand-made cocktail cabinet in the back of their Nissan Micra, and are happy enough with the car as it comes off the line (oddly, at a Renault factory in northern France).

Best-of-both-worlds marketers, like the pension firm I mentioned back at the beginning, would have us believe that we can perfectly well have both – the cocktail cabinet, so to speak, at the affordable price.  It’s true that in the digital world, customisation is getting somewhat cheaper.  But as a proposition, I don’t really think that a mass-market, affordable pension that treats you as an individual makes much more sense today than on the 45,000 previous times that firms came up with it.