A new era of money management: Changing generational views – [FULL INTERVIEW]

In this interview, Bob Winnington, CEO of the Money Advice Liaison Group, discusses the group’s recent conference, focusing on the evolving demographics of debt management.

Keynote speakers addressed generational differences in debt handling, the impact of digital technologies, and regulatory challenges with the conference highlighting a lack of financial education and the need for more proactive approaches.

The discussion also covered the rise in mortgage rates and income maximization strategies.

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Key Points

  1. Bob Winnington, CEO of the Money Advice Liaison Group, discusses the group’s recent conference and its focus on debt management.
  2. The conference theme, “The New Demographics of Debt,” addressed generational differences in handling debt.
  3. Keynote speakers included Lexi Mills from Shift6 Studios and Jonathan Phelan from the FCA.
  4. Discussions centered on the impact of digital technologies on financial behaviors, especially among younger generations.
  5. The conference highlighted a significant gap in financial education and the need for more proactive learning approaches.
  6. The resistance of Generation Z to traditional credit and the rise of ‘buy now, pay later’ schemes were notable topics.
  7. The conference also delved into the future outlook of debt levels, considering the impact of rising mortgage rates.
  8. Income maximization strategies were discussed as crucial in the current economic landscape.
  9. The event highlighted the need for firms to adapt to changing communication channels like Snapchat and TikTok.
  10. Compliance and customer-centric approaches in financial services were emphasized as vital.
  11. The successful conference led to considerations for future events addressing ongoing financial challenges.
  12. The dialogue indicated a shift in financial management practices and the importance of staying updated with these changes.

Key Takeaways

  • Understanding the dynamics of generational differences in debt management is crucial for financial organizations.
  • The increasing influence of digital technologies requires adaptive strategies in financial services.
  • There’s a critical need to enhance financial education among all demographics.
  • ‘Buy now, pay later’ schemes and their implications need careful monitoring and regulation.
  • Preparing for the impact of mortgage rate increases is essential for financial stability.
  • Income maximization is increasingly relevant in personal financial management.
  • Financial services must adapt to modern communication channels to remain effective.
  • Compliance and customer focus are key in navigating the evolving financial landscape.
  • Continuous updates and adaptability are necessary to address the fast-paced changes in the financial sector.
  • Collaborative discussions and conferences play a vital role in sharing insights and strategies.
  • Monitoring and understanding behavioral science in finance can provide crucial insights for customer engagement.
  • The growing complexity of financial challenges calls for innovative and forward-thinking solutions.
Interview Transcript

So hi, everyone. I’m here with Bob Winnington. Today, he’s the CEO of the Money Advice Liaison Group. So Bob, thanks very much for joining me today.

My pleasure. Good to see you, Chris.

Good to see you. So we’re just chatting a bit about your mal conferences. So I think was on the 19th of November. And I suppose it was just trying to get a bit of a observations from that site. I’ve actually had a lot of great feedback on it. And it’s in terms of the content and stuff. There’s a lot of interesting stuff I think you talk through smashing?

Yeah, so it’s, we’ve been in existence for 36 years now. I’ve been with the Organisation for the last seven. We’ve had a number of conferences, obviously 2020. As with everybody else, that didn’t happen. But we moved last year for the first time outside London and held our conference at the Birmingham Repertory Theatre. And it went really well last year. And we got good feedback, particularly from the Dutch advice community, and particularly those people who are based further away from London, where the costs of getting in and out of London’s quite prohibitive for that sector. So Berman work worked well for us. So we returned this year. And our theme for 2023 was the new demographics of debt. We’d have feedback and various conversations at both regional and national money advice Liaison Group meetings, about the way in which different people were handling their challenges with debt and their problems in interacting with organisations and very wide ranging experiences from people who are in generations ed in using apps and certainly not talking to people or seeing people very much working in a different way to the baby boomers, the more mature retired people etc. Who do like that face to face contact. And that’s much of generalisations because obviously everybody’s different, and everybody’s an individual. But we recognise these differences. And so we decided to theme our conference around the new demographics of debt. And we have a really engaging keynote speaker called Lexi Mills, who’s the CEO of an organisation called shift six studios. And Lexi has set the scene really by talking in far more detail and far more eloquently than I did about the way in which different people from different generations are handling the world at large, but also particularly any challenges they may have with debt, and particularly problem debt. So that we have great feedback on Lexi. She hadn’t spoken at one of our events before, but certainly set the day off in the right way. And then we had our second keynote, who was Jonathan feelin, who’s the head of department for retail lending supervision at the FCA. And Jonathan spoke about the challenges around the cost of living crisis, and also about consumer duty and the requirements that imposed in terms of firms in order to meet the SCA requirements in that regard. So that’s the day off, Chris, really, in terms of the two keynotes? Yeah,

what was some of the changing demographics that getting raised, obviously, you got this new, younger generations coming through, maybe have the different kinds of like, contact, contact preferences, but maybe also different, I think seeing different attitudes to debt.

Fairly much when in fact, one of the breakout sessions we had later in the day was focused around behavioural science, and how different generations approach money management. So it’s not just debt, it’s about money management, and always go to great pains and say, We are the Money Advice Liaison Group, not the debt advice Liaison Group. In many ways, prevention is better than cure. But quite clearly, the focus tends to be on people who do have problems that and do have those challenges. But the whole approach to money management is changing as to whether it’s a natural way for people to behave in terms of saving when they are younger, do they set aside money, I think a lot are still looking to buy their own houses and their own properties. And the amount of deposit they need in today’s world is very different. Certainly from when I first bought my first house, but I guess it’s still a percentage of the salary, it’s probably a little different in terms of percentage of salary, but it seemed far more achievable at two years ago, than it does now. So I think the way in which people manage their money, the way in which they decide to save or plan for other big expenditure is quite a key element. And I think there are notable differences across the different generations in that respect.

And so do you think that that’s changing because, say, for example, deposits or house prices are going up so much as an example, such as taking housing so people have to save more than they did before? Or do you think there’s a different kind of attitude towards death in terms of if I buy now pay later during on the background that’s always talked about, are people more ready to borrow or less willing to save? Or is it? Is that Is this just the same in every generation, which is just you’re just seeing it from a different perspective, maybe with different figures? Yeah, I

don’t think you can totally generalise. And say one generation does x and one generation does why I think it’s, it does differ from individual to individual. One thing that I have spoken about on a few occasions are people’s appetite to use credit cards. And my parents generation, firstly, there were only invented if that’s the right word in 1966. So my parents never had credit cards when they were getting their first house and everything else, they didn’t really get into the use of credit cards and the way in which my generation has, for example, but I do know that in generations that there is a little more resistance to using them, because I think they have seen and read about the difficulties that people have run into with credit card debts. And I know my son, for example, has been very resistant to getting one. And he’s only the only time he got one is when he went to the USA. And felt he needed to have one because it was a verification of who he was, and the fact that he had some credit standing. But yeah, very resistant, I think it does go in generations around how people manage their money and how they use some of the options that are available to them. And I think by now pay later is a very interesting one. Because in many cases, that almost seems to be the first option for people to pay. And that’s quite scary. I’m sure a few people went on to buy things through Black Friday, and looking on some of the websites you can spend, I don’t know 32 pounds, and the first option is buy now pay later over three months. And that’s a worry, in my view that it can be so easy and so accessible. And yes, that’s fine if you just buy one item for 32 pounds. But if you’ve gone online, and you’ve decided that Black Friday is an opportunity to get things at a better price and new buy multiple items in that way. There’s a problem waiting to happen.

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Yeah, and I suppose just going back to the younger generations, and almost like shunning credit cards to a certain extent at least early on. Um, do you see that in terms of people needing less advice amongst that particular age group? And I know, we’re talking generalities. And you’re absolutely right, there’s different for different people, right, but just just taking it as a cohort, does that result in less debt problems? Or is it just to being seen elsewhere, and as your fear is going to be seen elsewhere with Buy now pay later? So it’s just shifting it to? Yes,

it is, it manifests itself in a different way. And I know through talking with the debt advice, charities and agencies, there are a number of younger people who are coming for advice and help because they’ve run into difficulties. So I don’t think the younger generation are immune from this at all. And I think personal circumstances and their, their natural behaviours as well, I think that that, for me is a real theme around the behavioural science of debt, it’s quite a key element really is in terms of how different people approach that and how they think the way in which they do is something that’s been educated into them, not necessarily through the education system, because money advices very rarely on any curriculum. But it comes more from around parents, peers, other people who can influence their knowledge and understanding as to what they do. And

ask you a bit about education, whether we’re doing enough to educate people from around around that. And so to a certain extent, the credit card or that the loan kind of awareness, maybe you’ve suppressed it, but is there enough actual fundamental education and knowledge around how to manage it and what it kind of means and I know that there’s working on the background with the regulatory etc, around understandability? Making sure we can understand it, but it feels like, you know, have we done enough? And have we done enough early enough? No,

I think is the answer. I don’t think we’ve ever done enough. And I don’t think we’re doing enough at the moment. I know that there’s a lot of people doing some good things around this. We had a session around generations at at the conference. And one of the panellists we had was Leon Walters, the CEO from my bank, and they actually work a lot with young people and help with the education and understanding of budgets and how money works. And I know there are other initiatives that are going on elsewhere with other organisations who are trying to support that educational piece. And I’ve seen one or two books that have been written for youngsters. And when I say youngsters really from age seven on but trying to talk about money and savings and the philosophy that if you want to get something you really want, it doesn’t fall out of a tree, you actually need to do something to save your money, whether it’s your pocket money, or if you’ve got a paper round, or whatever it is, if people still have paper rounds, I don’t know. I think the the whole thing, your original question is, no, I don’t think there is enough education. Arguably, I don’t think there can ever be enough education about it. Because I think it’s important that people understand what they’re doing. And they need help, quite often because people don’t deliberately go out and say, I’m really keen to build up a big debt that I can’t cope with. Nobody will do that in their right mind. People, through various circumstances find themselves in those positions. And in many occasions, through no fault of their own, it could be the result of being made redundant. Or it could be the loss of a partner or family member or, or ill health or whatever, multiple reasons why people suddenly find themselves in difficulties. But I think the whole essence, that underpins being in a better place, is about education, and understanding what the options are, what the what the pitfalls are, to avoid falling into problem debts in the first place. But then if that happens, how to manage your way out of it. Yeah,

you just I know, how much work has been done in the debt advice sector, how much work has been done in a lot of the collections processes in terms of providing a lot of education? And I suppose it’s just it feels like it’s more powerful. If you go even further upstream, and prevent even happening, it seems like that’s, that could be more powerful.

Yes. Yeah. Totally agree. Yeah. Yeah. The old adage of prevention is better than cure.

And I suppose the other kind of reflection, I suppose, is, a lot of people in the collections industry and I age on the maybe, sadly, on the older end of the work at the working scale, how difficult Do you think it is for, for the industry to understand the new people coming into the space, particularly from from a generational point of view? And how important do you think that is? How fundamentally different is it because we tend to look at things through our own perspectives. Rather than run this through the new perspective of people coming through.

I think it’s important to bring younger people into the conversation. And that’s what we deliberately did at the mall conference was to bring in some, some generations, Ed and certainly Generation Y people onto our panels, and to get their views and their opinions on it is not people of our age, and our level of working experience. I think it’s great to hear from young people who are very much at the forefront of change. They understand the technologies far better than I do. They understand the different options, they understand the nuances. They’re there. They’re facing these challenges themselves, and they are discussing these type of things with their peers. And I think it’s really important to bring them around the table. And that’s what we did very deliberately at the conference this year.

And what were some of the priorities that that that demographic, or that kind of group had in terms of their either their, their their lenders, or their creditors, if they want to borrow money? Or if they want to communicate people? How’s that different from? What might be my perspective, I’m still in the world of probably, maybe not telephone calls, but certainly in terms of portals, those kinds of things, but it’s maybe a little bit more traditional, and what kind of surprised you would be or be surprising for the audience and some of the how to think about it differently.

Oh, goodness massacre question. I think there are certain ways in which communication takes place, which you and I probably don’t necessarily access that that type of information and snapshots and things like that, which I’ve never used, I always find that where it literally evaporates within seconds of having centre that makes me feel very nervous being an ex banker. But yeah, there are different ways in which people can interact. I think it’s the use of the apps and the use of the information that that some of the apps provide. Now, I know a lot of the banking apps have got a really good breakdown in terms of how expenditure is made through an account with the likes of Starling and Monzo have led the way in actually, a lot of the more traditional banks have had to react to the way in which they’ve changed the face of money management. I think there’s a lot of change going on, Chris and being brutally honest, it’s quite difficult for everybody to keep pace with it or it is moving so quickly and we had a fight final session at the conference around how can we take advantage of AI in the future, the data vast community, I think is a massive subject in itself. And I don’t profess to fully understand the ramifications of it. But it is moving so quickly, that we can’t ignore it.

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And I suppose one of the challenges of it moving so quickly as if we don’t keep out is we’ll will it pop out elsewhere, because people like fraudsters as an example, are so much quicker. And they do seem to understand this stuff quicker than we can get it through at least through approval committees. And so you start to see things like I know, loan sharks, as an example has been a hot topic, but also further kind of criminal behaviour as well. I imagine. So it’s, it’s on us to stay ahead of it, I would imagine. Yeah,

it is. It is. It’s a it’s a massive challenge. Going back to my banking days, I was actually a regional manager. And one of my key targets was reduction of fraud. And that was the only time in my banking career when I remember sitting around the table with representatives from other banks, and actually having the conversation to try and understand what the latest frauds were and how we could collectively try and be a step ahead of the fraudster. But the reality is that the fraudster was normally one step ahead of the banks, because of what you’ve said the time to put it in preventative measures, they’d already moved on and found another way of getting into the system, so to speak. Yeah.

And I do wonder if we’re going to see the same with contact channels, who mentioned Snapchat, and we might not use Snapchat, but it does seem like that’s pretty common. And I don’t know if you’ve looked at tick tock is specifically looking at tick tock, it’s so addictive. And there’s a lot of that advice. I don’t have a lot of debt advice actually on tick tock. But there’s also a lot of, there’s also a lot of lending advice or a type type of things on tick tock as well. It’s a bit of a wild west, it feels they don’t seem like that advisors are sort of moving with some of that. I mean, if you if you do a search for it, it does seem to be actually on there. Oh,

absolutely. Absolutely. And I think it’s the way in which it works. Again, it won’t come as any shock to you that are not on tick tock, but

then go on, as long as they don’t go on. It’s just too addictive.

Don’t worry, I have no plans. But yeah, a lot of people do use it. And again, it’s about understanding all the channels and making all the channels accessible and providing information to people through all the channels, because people will make their own personal choices to how they want to interface.

As part of the challenge for firms, though, I imagine is how do you manage to control this all this? Right? So it’s almost like you can have, you know, you might have 10 different channels, you now have to monitor social media you have to monitor and just that requires investment to actually be on top of it and making sure you’re reacting to it, making sure you’re searching it, are people making the investment they need to is that high enough? In the priority scheme for people to actually invest in it and spend time looking at it? I suppose that’s part of what you’re trying to do it now, wasn’t it?

I think so. It’s down to each individual organisation to determine how they they need to adapt and nullify their approach to tackle these type of issues. But what I do pick up on is that one of the the main growth departments in a lot of creditor organisations is the compliance department compliance is just so critical, not just in terms of those firms that come under the FCA regulations. But actually, the compliance in order to meet the necessary conduct and activity that they need to interface with our customers is just so important that for me, the customer should be at the heart of whatever any organisation does. And in order to fulfil the customer’s needs, then you need to have a team of people who are making sure that the organisation is doing it in the right way.

Yeah, nice. I mean, compliance has been a huge focus for everyone. I was just just having a conversation just recently around how that’s almost like changing between like we used to be very focused, certain deflection recoveries rolled on credit risk and payment loans, those kind of things, but certainly that it’s almost like getting aligned in some areas almost like towards the compliance elements as well, particularly with things like consumer duty coming through. Absolutely. And how we can be more of a compliance function than we are actually a collections function. And is that a good thing? I

suppose. It’s about how to marry the two really, you can’t get away from the core function and the core activity that the organisation undertakes, but it’s about doing it in the right way and making sure it’s in the best interest of the customer.

I suppose certainly some of the more recent kind of regulation that comes through that is in the interest of the customer. So if the regulations in the interest of the customer, that’s a good thing as well. I think you could probably argue that as well.

Yeah, no, I disagree with that.

So um, what about what about the behavioural science stuff that’s been so nudge and those kind of Islands has been a bit of a hot topic I’m interested in what sort of like your debrief on that kind of situation was or that conversation was our is our interest with customers changing, or they’re almost like different kinds of dynamics we got to think about.

Yeah, I think so different. As I mentioned before, different generations seem to approach money management in different ways. And I think a lot of it is about how people think and feel. And whether they are, if you’re like, calm and measured in the way in which they they live their lives, and therefore they will look at a lot of information level absorb that information, and then they will make an informed decision. Or are their behaviours, less structured? And, and more reactive? Do they react to compelling adverts that encourage you to buy X, Y? Or Zed? Do? Are they impulse buyers who will sit there and just sit on their phone or their iPad or whatever their device is? And just jump from one thing to another and just have a mad half hour? And there’s everything in between as well. And I mentioned Black Friday before? How do people react to that? Are people sucked into the whole? Deal, which seems to be pushed forward by organisations? Or do they view it as being says too good to be true to buy really need this? Is this something that will add value to what I want? Is it something that I need to buy? And I think that sort of behavioural science, what makes people go one way or another is absolutely fascinating. And I know that discussion was very interesting, in my role, with three breakout sessions running concurrently, and I was hoping for one, in all of them, yeah, trying to get bytes of each and I know that particular breakout room was filled to capacity, because people wanted to hear about it. And they wanted to get some insight into that. What’s

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your sense on the outlook for the future in terms of I mean, particularly in terms of arrears levels, or debt load, those kinds of things. He talked about it from a generational point of view, but just generally the sense that you’re getting, where do you think we sit going forward from here, because the arrears levels really hadn’t come through. And yet, you hear people saying rushing out to buy new things, it feels like debt levels are increasing. And that’s, I suppose a bit of a concern. From my perspective, at least anyway, whether we’re running into a problem potentially, is

Chris, there are different forms of debt. You know, somebody who just has a mortgage has a debt. But if they’re managing that, and they’re not borrowing any other money, then you wouldn’t necessarily turn that as a problem that there are others who, unfortunately, through the very circumstances I mentioned earlier, find themselves in problem debt, sometimes through no fault of their own. But the real challenge is, how they are facing that position that they’re in and what advice guidance has helped, that they’re getting the debt advice, challenge, charities are doing a fabulous job in terms of supporting them. Each time I visit one of the charities or I go along to meetings involving them, you know, I can’t help but feel they are doing absolutely everything within their power to support people and to help people but there is always the issue of people helping themselves. Yeah. And it’s recognising that there’s a problem and seeking that help. And then having sought the help, actually then managing it in the right way. There are various things that I think we haven’t seen the real impact from yet. And the one that that hits me between the eyes, as far as that’s concerned, is mortgages. People who are on fixed rate mortgages, obviously, the rates have been increasing and continue in recent times at high levels. And people who are still in the fixed mortgage that the mitre fix three, five years ago, will have a shock when that fixed mortgage runs off and they need to refix or reevaluate what, what they’re gonna do. So I think there is an element of, we haven’t seen it, the true impact of the mortgage rate rises yet. I think that is something that that will permeate through over and having listened to various economists talking about it, literally the next 234 years, I don’t think it’s going to be in the next 12 months in isolation. So that’s something that I think will have a real impact. And I think it’s just that and about what else will change in the market, the energy price rises. Some people are still reeling on the back of that, but it’s probably just stabilised a little bit. Albeit there’s going to be a small rise for some people not so small rise in January. So I think people Just very aware of the impact. There’s a lot of articles in the papers online television talking about the cost of living crisis, the energy crisis, the mortgage impact, I think the profile is there. It’s how people react to it.

Yeah, it does feel like it’s almost like this creeping increase of people increasingly getting into financial services happening slowly rather than there being like a sudden shock. So like an economic shock, because we don’t necessarily see it as much in terms of employment rates as an example, which is a shock to people can’t control and then you have a loss of income, etc. It’s more than this creeping, which is, which is, which is harder to harder for to manage or identify to certain to certain extent. Yes,

it is. Yeah, it is. It’s only it, for example, it will only have a real impact. For some people. When their fixed mortgage lenders, often they are faced with potentially 1000 pounds a month increase in their mortgage as one line in their budget, that will have a notable impact for those people. And

last year, any thoughts around things like as that starts to increase, you get into more and more to like negative disposable income when you’re doing budgeting and those kind of things and it does feel like there’s the tools to do to do a lot with that can be more limited. Any thoughts or movement around around that in terms of extra things that we need to do I know income maximisation always comes up as an example. But well,

I was just gonna say that, Chris, actually, because the last two years at the mall conference, we actually had breakout sessions around deficit budgets. And they were always well attended. And there were lots of discussions that went on both within the context of the breakout session, but actually afterwards as well, which is equally important. This year, we turn it on its head a little bit. And we had a session around income maximisation, which is almost the flip of the same coin. To say there are substantial amounts of benefits that are not claimed by people who can justify a big claim them. And without knowing that the full detail behind it, a lot of those people will have financial challenges and difficulties as well. And the ability to be a aware of the benefits that are available to them. And secondly, to claim them will put them in a better financial position. So we decided to tackle it in that way. Obviously, Lee Healy from income max is very knowledgeable and experienced and led that session. But we also had Devin Gavarnie, from policy and practice who was part of the panel that we had for that session, along with and again, it verifies what I was talking before, rent boy who is the founder and CEO of lightning reach who is young and has a different approach, and is making some waves in that sector. So it was a good discussion with Jessica Taplin, from the British Gas, Energy Trust and Anna buckle from pay captain. So it was a really interesting discussion around income maximisation and how we can approach it in a different way.

Yeah. So kind of fascinating areas. So fascinating to see how things are changing. And I think it’s important for us to stay up to date on it that just in terms of you like your conference, etc, just making sure we’re staying ahead of what’s actually changing and making sure that we keep up with the change to make sure that we can help people as much as possible. So yeah, so Well, we’re Bob, thanks very much for the insights. I really appreciate you joining me is fast. And it sounds like you had a great a great conference. And certainly I hope there’s a lot of help for people for people.

Yeah, absolutely. We had the highest highest attendance we’ve ever had. Chris, we had 20 people there. And our challenge next year, we’re already thinking about next year is do we need to look at an alternative location where we can accommodate more people because We’ve almost reached saturation points at that particular venue. So our thoughts are turning to next year already. We have four national members meetings already lined up two will be Phase two will be virtual, to meet the needs of our membership. And yeah, 2024 should be an interesting but equally challenging, you are happy.

Thanks very much, Bob. I know. I know. You’re we’re battling on time against the tides as it sounds in terms of in terms of making sure that you can get to your next meetings. So I really appreciate you making making the time for me.

My pleasure. Good to see you Chris. Thanks very much.


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