Edition: March / May 2017
Editorials

FIRST WORD

Get sexy

Savings institutions are inclined to be too modest in competing for discretionary incomes. Same old, same old techniques should be rethought.

Credibility is the casualty in the modern-day outpourings of “fake news” and “alternative facts”. From US president Donald Trump down – and there is a long way down – people believe what they choose to believe. They acquiesce in the proliferation of unfounded beliefs, then act on them.

That words have consequences is demonstrated uncomfortably close to home. “Save” is the currency of financial institutions’ marketing. It’s meaning has become confused. Equally dangerous is when “retirement” and “pension” connote procrastination and lethargy

Were it otherwise, SA’s record for long-term household savings wouldn’t be so dismal and the prospects for adequate old-age provision so dismal. From the millions of rand annually spent on institutional exhortations, much falls on rocky ground because of terminology that’s ambiguous or downright dull. Advertisers should start to reinvent the words they use, perhaps simultaneously also challenge through advertising regulators the misuse of words by competitors for consumers’ rands.

A prime example is “save”, exceedingly popular in the parlance of retailers. Their advertising resonates with encouragement to save by buying before prices increase, to save by buying two items for the price of one, to save by buying at a special discount temporarily on offer etcetera etcetera. Never mind which purchased items are surplus to requirements, and don’t bother about pension plans which aren’t.

Just rush, on an induced impulse, for the perceived bargains. They’re fundamentally unlike the grudge purchases of actual savings that delay instant gratification, that stimulate debt accumulation at the expense of capital accrual.

Who cares about the power of compound interest? Haven’t heard of it! Might have been told something at school, where financial education should begin, but what the hell. One can worry about such things later, always later, until it’s too late.

Retailers are getting away with the murder of language, and savings institutions are allowing them to get away with it. They use the same words to describe utterly different concepts. In only one context can “save” be correct.

Saving is the antithesis of spending. It’s no more possible to save by spending than to live by dying, to sit by standing or to fight corruption by taking bribes.

In the dictionary meaning, to save is to “store up for future use”. In the retailers’ meaning, and usually in the shoppers’ understanding, money saved equates to money spent on an item bought more cheaply at one time or place than another; not to money stored for future use.

Forgive consumers the confusion. It’s not of their making. What it does, however, is give retailers an overwhelming advantage. Consumers can easily understand price comparisons which, to be fair, they cannot do as easily on financial products. Also, in the nature of choices, the temptation for quick satisfaction far outweighs an apprehension over distant timeframes.

LIES, DAMNED LIES AND EVERYDAY WORDS

"When I use a word," Humpty Dumpty said in a rather scornful tone, "It means what I choose it to mean - nothing more nor less."

"The question is," said Alice, "whether you can make words mean so many different things."

"The questions is," said Humpty Dumpty, "which is to be master - that's all."

– from Through the Looking Glass by Lewis Carroll.

The marketing competition is metaphorically between apples and pears, not helped by words that pitch two unlike categories into the same battle. For either retailers or institutions, “save” must fall.

For both to keep it is to ignore a cause of peoples’ lack of engagement with savings and debt management. The less they’re understood, the more menacing the omens for individual households and the national economy.

Obviously, there must be successful initiatives to promote consumer financial education. An adaptation of marketing messages, consistent with the good-practice code of the Advertising Standards Authority on the use of “save”, would help to advance it.

Another thing about these messages. The savings institutions might do themselves and their target audience a favour by questioning whether their advertising is designed rather to capture market share than to extend market size. If they were more effective in the latter, then perhaps the savings pool would be looking a lot more buoyant.

Some random thoughts:

  • The words “retirement” and “pension” are technically appropriate but deadly boring. Their repetitive use is perhaps self-defeating too. They infer decades-long time horizons of irrelevance to millennials who focus on there here and now, suggesting that they have plenty of time to correct the wrong of not starting to save early. Rather tuck “retirement” and “pension” into the finer print, instead to highlight the benefits of long-term saving if the appeal is for the younger generation to make money;
  • Fear tactics don’t work. By telling people that they’ll be impoverished by insufficient saving reeks with negativity. People need to be encouraged, not frightened;
  • Statistics generally bandied about the percentages of people likely to retire comfortably are not only threatening but meaningless. Nobody knows what awaits in terms of longevity, health, inflation and investment returns. Individuals’ circumstances differ in terms of expectations, provisions made and intentions for the period after formal employment;
  • Retirement isn’t what it used to be. Lifelong employment and defined-benefit funds are history. People pensioned off at say age 60, or retrenched earlier, are likely to live for much longer than previously. Their desire, if not their need, to continue working makes the retirement age redundant. Their experience, in a country desperately short of skills, opens fresh opportunities for income generation – whether as consultants, entrepreneurs or artisans. Not everybody wants to spend their last 10 or 20 years sitting on a beach, and for the swelling ranks of the self-employed there’s no retirement cut-off;
  • Neither are retirement funds what they used to be. They’re still about savings and pensions, but no longer exclusively. To an increasing and vital extent they’re also about empowerment as shareholders in companies and stakeholders in the economy. Funds’ roles are fused because the societal influence they can assert, by the exercise of rights extended to them, are inseparable from the benefits they exist to provide.

Yet an abundance of messages about savings, pensions and retirement remain stuck in an obsolete paradigm. A new reality should be reflected. There’s sufficient creativity to achieve it from advertising agencies amply rewarded.

Allan Greenblo,
Editorial Director