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Financial inclusion – simple products and education

November 2021

In my previous article, I asked the question “why don’t smaller savers invest?” I suggested that the answer could be found in the barriers created by complex products combined with high minimum monthly payments and opening balances. They’re not designed for smaller savers.

So, why can’t the financial services industry be more inclusive by providing simpler products, with transparent charges that support those with lower affordability? Possibly because they’re not as profitable for shareholders. A research paper from December 2003 suggests that, at an early stage in the Government’s discussions with potential child trust fund providers, one of the concerns was the cost of operating these accounts versus the likely profit. In simple terms they weren’t seen as having big enough economies of scale to make them profitable.  

It’s an underserved customer space, but one in which I hope we will see growth that will benefit many more people. I believe that the key to financial inclusion is education; for example by helping young people to feel confident in understanding what investment is all about. In my earlier article I pointed to some research that suggested that although 84% of teens thought it was important to save money, only 36% felt confident in investing. 55% said they didn’t understand what stocks and shares are.

Or maybe it’s the support that mutuals like OneFamily give to charities such as the Elderly Accommodation Counsel that helps older people to make informed choices about meeting the costs of their housing and care needs.  Our plan is to reach out to many more people to offer our help, supporting them as they increase their financial confidence.

It’s an area that OneFamily will be focusing on more closely over the coming years as we shift the concept of mutuality forward. It’s a dynamic step-change, but it’s an exciting future for our members

This is why supporting the less well off with their financial needs has traditionally been the terrain of the mutual sector, because our profits are reinvested back into our business to support others. We’ve historically provided products that support investment by our use of pooling. In other words, we all help each other. It’s a simple concept really and is right at the heart of what it is to be a mutual.

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Teddy is a strong supporter of diversity, inclusion and equality. A passionate believer in social mobility and financial inclusion; he is using his position as CEO of OneFamily to help the young, the disadvantaged and the marginalised to reach beyond their expectations. His view is that everyone in society should have the same opportunities to access financial products – regardless of their wealth.

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