View most financial providers’ websites and you’ll see a section full of gold stars and medal logos denoting the various industry awards they’ve won. Follow enough providers on social media and you’ll see so many announcements of honours won that it feels like the 2012 Olympics all over again. But all those glittering trophies can blind you to what really matters to the average customer.
The awards that financial firms tout the most are the competitive ones with a single winner each year, usually presented after a chicken dinner and 20 minutes of stand-up from a TV panel show regular with a nagging doubt that they’ve sold out. It’s great news for the company’s PR department, but not much use to the customer.
It’s a long-shot that the awards panels criteria for deciding the best will match up to the customer’s personal needs. And who’s to say if the winner really was the best or if there’s that little bit of politics to make sure the trophies don’t all end up on the same table.
Next up we have the star ratings system where an independent analyst gives a score out of five and then either the business slaps its hard-won 5-star logo all over the place, or it gets a score of four or below and, well, actually it wasn’t that important anyway, so let’s say no more about it.
The problem for the customer is that there’s no real way of distinguishing between a scheme where three stars means an average performance that’s perfectly competent and worth considering, and one where four stars means “don’t touch it with a bargepole.”
The finance industry has a particular quirk with ratings “awards”: the customer has to decipher whether the honour refers to the company or a specific product. A pension provider might boast about its five star rating for a drawdown plan, but that’s not much use if this isn’t what suits the customer’s needs. It’s also often far from clear whether such a rating covers returns, fees, ease of use, reliability or underlying financial strength.
Then we have the comparison lists where a business is ranked against its competitors. For example, I recently saw a company celebrate being the 70th best medium-sized place to work in the UK. This doesn’t really tell us anything however. Depending on the industry, country and time in history you’re talking about, the 10th best place to work might be a hideous sweatshop or the 500th best place to work might be a supportive, pleasant office atmosphere.
To be frank, awards are virtually useless when we recommend a provider to a customer. We’re more interested in factors that really matter, such as:
- The provider’s underlying financial strength.
- Their fee structure.
- Their range of investment options.
- Whether their communications and administration are competent.
Most importantly, we rely on our experience and that of our customers who deal with the provider.
An award lets a company proclaim that it’s the best of the bunch or achieves the highest standard.
What matters to us is whether the provider is right for the customer, and that’s a question you can only answer once you have actual experience of working with them.