In our current climate — which is unpredictable at best — many people are feeling anxious and craving stability and guidance in their financial planning. Due to their concern, consumers’ usual antipathy to the financial services category is weakened and they are prepared to engage with an industry that they previously disliked. But at the same time, a large part of society is feeling ignored, alienated, and ostracized by the social and political institutions they once trusted.
This presents a dual set of challenges — but also a major opportunity — for brands that can boldly step in to offer true guidance rather than empty platitudes, as emphasized by Mastercard CMO Raja Rajamannar:
“This is not a time when you want to sell. This is the time to serve. Consumers don’t want you to keep sending ads to them in a tone-deaf fashion. They’re going through a crisis with a lot of fears and apprehensions … If you’re trying to solve some problem or pain point for people, do it. If you’re not trying to solve some pain point, then do something for the community.”
In other words: To truly engage audiences, a brand story has to be not only relevant to consumers right now, but also marked by authenticity, empathy, and purpose.
The financial services category relies on longevity; it is based on long-term relationships and commitment to financial plans that span decades of good years and bad. For that reason, it’s crucial to establish consumer loyalty. In attempting to do so, most financial services brands fall back on universal — and often hackneyed — appeals to comfort and peace of mind, underpinned by products that are indistinguishable from competitors’. This “safe” route cunningly avoids the perceived risk of having an actual point of view.
But that low-risk strategy isn’t good enough anymore. Global shifts in the economy (brought about by a world health crisis), as well as the advancing conversation on equality, inclusivity and diversity, mean that financial brands can no longer just sell a product. They must engage with their community, allay anxiety, and be a part of the solution. If not, they’ll be usurped by brands that are passionate about embracing change.
Mind the wealth gap: The human impact of investing
Be it the 2020 reckoning on social justice and racial equality or the extreme wealth disparities laid bare by the pandemic, financial institutions are being faced with an opportunity to impact the larger economic issues of our society — and commit to the shared values between their investors and their brands.
The stock market gains of the past decade were mostly experienced by those at the wealthy end of the wealth gap. It’s easy to continue to court those prosperous clients with sizable assets to invest, but it’s braver to tackle wealth inequality. Today’s investors come from a diverse array of backgrounds, many of which are not defined by the traditional roles, norms, and stereotypes associated with wealth and privilege.
When seeking to alleviate wealth inequality, race is a particularly pressing issue to consider. According to the Federal Reserve’s 2016 Survey of Consumer Finances, the median family net in the US is nearly $171,000 among white families and just $17,600 for Black families. That translates to financial instability in communities of color (and the lack of opportunities and options to move into safer housing and better jobs with higher pay), as well as massive underinvestment in those communities.
In addition:
White families transfer wealth between generations 3x more often than Black families do
Black households are nearly twice as likely to lack access to credit
Black-owned businesses get turned down for bank financing twice as often as white businesses do
So how can financial institutions make an impact on underserved communities — especially considering they’re largely seen as triggering the massive inequality (or at least remaining resolutely blind to it)?
Of course, part of the solution is to create financial products aimed at communities who need it most — from easy-to-use, flexible savings products to no-fee credit cards aimed at building credit equity. But it goes way beyond that — and doing the bare minimum could actually come off as tone-deaf (the problem, often, isn’t that people can’t find a product; it’s that they don’t have the funds to invest). Lack of outreach to non-whites is the reason for lack of engagement, as this diagram shows:
That’s why a main plan of action for financial companies is to actually get involved in underserved communities, rather than solely reach them with breathlessly cheery emails or cleverly named products. It’s about empowering people with education, earmarking market research and analysis bandwidth to focus on underserved communities, and getting involved with local and national regulatory issues and committees. Lastly and most importantly, it’s about fighting institutional racism in the category.
Large financial institutions have the muscle and influence to invest (both financially and human capital-wise) in these initiatives. But instead, they often take the safe route, especially at times when the stock market is inching ever higher and it’s tempting to play to their investor base and avoid “touchy” subjects. But it’s possible to make an impact on an audience who needs it badly without alienating their core audience — it takes a willingness not just to disrupt and make a difference, but to make action and inclusiveness a part of the brand story.
By the way, doing social good in this way isn’t just helpful for society. It can also boost the bottom line. According to the second annual Corporate Responsibility Survey sponsored by insurance company Aflac (in partnership with FleishmanHillard Research and Lightspeed GMI), 83% of professional investors are more inclined to invest in stock of a company well known for its social responsibility. Look at that: You can do well by doing good.
CASE STUDIES
Prudential: Looking at challenges, brainstorming solutions
Prudential’s “Bring Your Challenges” video series looks at the challenges facing society — and investors — today, and takes a pragmatic, critical, and solutions-oriented approach to unpacking them. With topics ranging from closing the insurance gap, to supporting underserved communities, to fighting the reduction of workplace benefits (specifically health care), each video provides actionable insights plus related stats, as well as resources for both learning more and getting involved.
Synchrony: The Bankroll EP
Partnering with actress/producer Issa Rae and her music platform Raedia, Synchrony Bank introduced a modern day mixtape focused on different money-centric stories. Synchrony hopes to reach those with New Year money resolutions in a less overt manner than traditional advertising.
Brands need to allay anxiety caused by global risks
2020 has revealed greater global and security threats to economic prosperity, financial performance, and the safety and integrity of financial systems. According to a Morningstar study, participants who reported experiencing positive emotions during the pandemic in 2020 were more likely to purchase additional assets. In addition, most people stayed put or sold when they considered present circumstances and historical precedent; only when the situation was phrased as an active opportunity did they purchase additional stock.
In response to greater investor anxiety, financial brands need to find new ways to empathize with and establish confidence among them, especially as large shifts are underway in how we live and work. But is empathy enough? The journey should feel as rewarding as the destination. But the future destination is what most of the category messages against. It’s time to allay anxiety by reframing the conversation in the now.
This suggests that during a downturn, the most important thing to do is make a client feel positive about investing as an opportunity — in other words, appeal to their emotions (including their anxieties) in an authentic way, rather than breathlessly implore them to save for retirement because it’s the “responsible thing to do.”
To be successful here, the approach should be to offer reassurance and guidance, and focus on seizing an opportunity in the present moment and getting ahead of the game by boldly embracing the journey, rather than constantly thinking about the ultimate destination. Empower clients by letting them know that, while there’s so much about the world that we can’t control, staying consistently committed to a retirement investing game plan is something they can control. And, while they may not be the next Warren Buffett, they’re being proactive and moving forward.
That “bold” part is important. Create excitement by implementing innovative strategies, listening to clients, and offering reassurance and a revised game plan for the many investors who may have hit tough economic times. Consumers will remember how a brand helped pull them through a tough time — especially younger consumers (according to one study, 81% of Gen X is worried about funding their golden years, and have only $61,000 saved). That requires using heart as well as head — and a lot of companies don’t have enough of the former, especially when trying to respond to a crisis.
And this isn’t just a “nice-to-have”: The onus is on businesses to provide this guidance and inspiration, as consumers are placing their trust in them more than ever. According to the 2021 Edelman Trust Barometer, business is now the most trusted institution for 61% of global respondents. That’s more than NGOs (57%), government (53%), and media (51%). That level of trust is something companies can’t afford to squander.
NerdWallet: Simple reassurance for today’s world
“Turn to the Nerds,” a 2020 commercial spot by NerdWallet, eschews the nebulous “save for a golden future” messaging that many are finding frustrating right now, and focuses entirely on the present. It shows a series of people looking at life (quite literally) from their perspective, with voiceover questions that are very much focused on the now (“Is now a good time to invest?” and “How can I get my credit score to go up?”). After appealing to common money worries, the spot provides assurance that customers can “turn to the nerds” for answers to these questions and more. Obviously, long-term investment is a goal of the service, but right now, the focus is on showing that the brand can be a resource to help its customers in this moment, rather than preaching about hitting a Boca Raton retirement goal that seems worlds away.
One final observation: The fact that a lot of brands have been slow to pivot their messaging to be consistent with our current reality isn’t surprising. At FIG, we understand the disconnect between the category and these significant challenges. That’s because in challenging and ever-changing times like these, CMOs and other leaders are often more focused on the data end. We exist to serve those leaders who recognize we’re at an important societal pivot point, share our belief that stories scale brands, and want to harness the outsize effectiveness of jaw-dropping creativity, but just don’t have the time or the teams to do it themselves. Our team at FIG has a history of working with those leaders and analyzing the data to come up with a plan for storytelling that achieves business goals while having authentic personal and social impact.