What growing anxiety means for financial services
Written by Emily Pearce
Danger seems to be everywhere. It’s making us more anxious about taking risks. And more uncertain about our futures, and how to prepare for them. For the financial services sector, this means we need to be both reassuring and encouraging.
The number of people with anxiety in the UK is growing. There’s been a 12.8% increase since 2000. And that’s only counting the people who have been seen by a doctor for it. Many people are just getting on with their anxious lives without support.
A survey by the Office of National Statistics uncovered that 1 in 6 adults had experienced some form of ‘neurotic health problem’ in the past week. While the charity No Panic estimates that around 10% of people will have a ‘disabling anxiety disorder’ at some point in their lives. And last year 15.4 million working days were lost because of stress, depression or anxiety. That’s around 25 days lost per person.
So, what’s causing our anxiety? Well, frankly, it’s the state of the world. We have rolling news feeds of terror attacks and controversial politics at our fingertips. There’s the ever-present problem of climate change resulting in the rise of ‘eco-anxiety’. We’re becoming more aware of the threats around us.
But that’s not all. We’re also anxious about our futures too. Specifically, about being financially ready for them. This is something that younger people feel most. Research suggests that young people will be working longer and harder for a smaller pay off in retirement. So it’s not surprising that an estimated 28% of younger people are experiencing so much financial anxiety that it’s impacting their work performance, sleep and health.
What the financial services sector can do about anxiety
Talk about risk openly
The balance of risk and potential reward is a part of financial services, whether it’s mortgages, investments or pensions. But when it comes to soothing financial anxiety it’s better to be upfront about risk.
Businesses that are direct and honest about risk will reassure customers that they have the competency and confidence to guide customers through it all. Whereas businesses that hide behind vague language and generic risk statements will leave customers feeling in the dark. As a result, these customers’ imaginations will fill in the gaps with terrible scenarios of what could happen.
Provide tools that help customers plan
As a species we don’t deal with risk rationally. When risk is present, the primitive fight or flight part of our brain kicks in and we often make snap decisions.
So, it’s best to offer customers tools that help them to manage their reactions to risk. We had a go at this with our animation, ‘What is investment risk’. It tells people in a clear and unintimidating way about the impact of risk on their money.
Meanwhile, PensionBee and Moneyhub have teamed up to create tools that use data-analytics and machine-learning to let customers track how their current behaviour will affect their financial future.
Show an adventurous side
Customers might be hyperaware of risk – potential or imminent – but still want to experience a sense of adventure. In 2018, 31% of UK consumers said that in the face of growing risks they actually strive to be more unafraid to take them.
This is a great opportunity for financial services if they can strike a balance between being reassuring about risk and positive about reward.
But it’s also important not to be unrealistic about the benefits that adventure can deliver.
After all the UK consumer is the most cynical in the world, so if you promise them too much, they’ll retreat, believing it too good to be true. Promise them support and know-how to help them reach a realistic goal and you’ll attract the anxious but adventure-seeking crowd.
What do you think? Have you come across anyone doing a good job at both supporting and soothing our growing financial anxiety? Let us know in the comments below, or on Twitter.
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