On Design [Quotes]

"A designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away."

Antoine de Saint-Exupéry Terre des Hommes (Man and His World)

"Design is not just what it looks like and feels like. Design is how it works." 

Steve Jobs 

"Almost all quality improvement comes via simplification of design, manufacturing... layout, processes, and procedures."

Tom Peters 

Money Mail launches five-point manifesto in bid to get Britain saving

I was heartened to read Money Mail's  five-point manifesto in bid to get Britain saving again.

With some exceptions, see below, I think it is a very sensible appeal.

For purposes of analysis, I've categorised their points slight differently:

1. Policy simplifications the government could make.

Money Mail rightly points out that the current ISA limits between cash and stocks and shares ISAs are confusing and simply get in the way. They should be removed and simplified. Likewise, preventing children with Child Trust Funds from taking out Junior ISAs is absurd. I can only imagine it was a sop to Child Trust Fund providers who did not want to make their products more competitive. I cannot see any real benefit to savers or to the industry. It is purely a question of public policy.

2. Things providers should be forced to do

I always think it is a pity when companies are forced to do things that their customers clearly want and would value. However, sometimes firms would be disadvantaged if they offered something to customers but none of their competitors did, and in those circumstances, some compulsion does not seem inappropriate. So regardless of how it is achieved, I think it would be great if all financial services companies provided friction free ISA transfers, better disclosure around past and future rates and charges (I am in favour of mandatory post-charge performance reporting), and enforced consideration of retirement income options. Similarly, whatever my misgivings about NEST/auto-enrollment, the rules prohibiting employers from encouraging opt-outs from auto-enrollment must be strictly enforced (although it is hard to imagine legislating a rule without that intention). Such changes would cost the industry very little in the short-term, would benefit customers enormously, and so, if applied uniformly across the entire industry, would be benefit the industry tremendously in the long term.

3. Simplifying interest rate structures

This is where I think I and the campaign part company. I don't think there should be any interference in the actual rates financial services firms pay savers. They should be able to pay different rates for different levels of service.

I would be particularly concerned if banks could not charge different rates according to the channel used. If online only banks could charge a rate reflecting that channel, but full service banks had to charge a single rate across all channels, for example, they would be at a distinct disadvantage. I accept that current practice may disadvantage the older and poorer savers, as the Money Mail campaign points out, but I believe we should look for solutions to this problem other than removing the rewards of innovation from the industry.

Likewise, I don't think banks should be forced to offer the same rates for ISAs as they do for other savings accounts, especially if they are forced to increase the level of service they must provide (see above). No, I think pricing and service levels should be made more transparent so that customers are able to make more informed choices, and then I think we should allow natural market forces to establish prices without intervention.

What do you think?

When did 'sales' become a dirty word?

It seems that 'sales' has become a dirty word in the UK financial services sector.

I am reminded of this as I read: Revealed: The bonus list that encourages 'pressure cooker' sales culture at Lloyds | This is Money.

The article says:

He has sent This is Money a document revealing how many points each member of staff 'scores' if they sell certain products as they aim to hit targets - and how this can result in customers not getting the 'best advice.'

At the same time, a bewildered This is Money reader who walked into a Halifax branch wanting to take out a simple two-year fixed savings account was left bamboozled when a financial adviser tried to talk her into taking out an investment product.

Commerce is based on the idea of creating products and services and then trying to sell them to customers. It's been going on for centuries.

The last time I walked into a mobile phone shop to check something on my contract, the floor staff tried to upsell me a new phone. Would I have upgraded at my own initiative? No. Did I need an upgraded phone? No. Did I want an upgraded phone? Yes, a little, once he'd finished the sales patter. Did I buy the upgrade? Yes.

My local car dealership keeps phoning to try and sell me a new car. He's not trying to sell me the most suitable car, or even trying to find out if I actually need a new car. He is simply trying to sell the new car that the manufacturer to which he is tied has just released. Again, I was not thinking about it myself, and certainly don't need a new car, and yet am strangely tempted (although I've not actually bought a new car yet).

My point is, people are trying to sell us stuff we probably don't really need all the time and their bonuses depend on it. And cars are fundamentally as complicated and dangerous as retail financial services products. (Your choice of car could contribute directly to your death, so they're much more dangerous than financial services products!)

Of course, if the salesperson is dishonest or misleading in the representations they make to the customer, we're no longer talking about 'sales' we're now talking about 'fraud'. That undoubtedly is a bad thing. Likewise, there will always be rogue traders and cowboys, just as there are in other sectors. These too should be hounded out of town.

But I think it is time we stopped demonising the very concept of 'sales' in financial services, and recognised that for a sale to take place requires both a willing seller and a willing buyer. I am not advocating no regulation and no control - quite the contrary - but I do believe that there should be greater sharing of the responsibility for outcomes between both the seller and the buyer.