In 2018, the international legal harmonization practice in the financial field (IDD, KIID) will continue, but even in the indirect sense, we could also introduce the GDPR. In addition, the MNB is constantly working to find a healthy balance between customers and service providers. It is feared that excessive bureaucratic systems will not benefit customers or companies at all. I’ve been thinking a lot about what the solution might be? I don’t necessarily believe that a plus 3-10-20 page statement can solve a more complex problem. It’s enough to see what’s happening on the mortgage market. Brainless, sometimes 50+-page notarial documents and credit contracts were simply inadequate to prevent a foreign currency loan crisis. In recent years, clearer, more transparent and simpler forms of contract have been created in this area, which is easier for the client to understand and thus make a better decision…
The financial market needs three things to work well:
- good customer
- good product
- good advisor
# 1 A good customer
I think that the key figure in the development of the financial sector and the Hungarian financial culture will be the customer who has the following indicators:
Among other things, this blog also aims to develop financial literacy, appreciation and education. However, in spite of writing the need for reading and information on the part of the client, I write any quality and important articles on the subject. The hardest struggle on this front is clearly the increasingly needless communication. Because it is a good article, Facebook’s increasingly rigorous and money-consuming algorithm simply does not show everyone (who may be interested) the article without sharing it. Unfortunately, people share Kasza Tibi’s meme more easily as an informative and important article.
Everything is always about the interests of the customers, which can be regarded as normal in a consumer society. However, there is a client layer who is abusing it. A typical example of this is that when you want to get all the information for free, you want to work for free and ultimately what you say today, it will be denied tomorrow. Because this is a lot of money and sanctions, financial service providers are forced to “protect” themselves with the excessive bureaucratic system because of the wrong customers. The biggest problem with this is that the interest and subjective right of the right customers is violated: the clarity of the matter.
Ready for action
The financial sector burns significant resources to convince prospective customers. In fact, they are suppressing their contracts, so that somebody can finally do something. This can create a particularly unpleasant feeling in the client. From the development point of view, it would be much more advantageous if a properly informed client would also be tricky as soon as the decision was made about something. The worst thing is that they are postponing indefinitely because they are damaging themselves!
It is also a huge problem in today’s financial market that customers do not make their financial decisions in a deliberate way, but from a sudden start. In addition to this decision, they are not called upon by real professionals but by the neighbor guy who has been working in this field for three weeks. The result is a disaster. Bad advices, bad contracts, bad decisions are the way to go, which results in customer disappointment. And frustration for years, decades, “scares” people out of the whole, and ultimately damages themselves.
If you want to list the qualities of an ideal customer who is financially more aware of your daily lives, you should include self-criticism in the flags. Unfortunately, many customers are unable to realistically see their own financial situation and future potential. It often overestimates itself by magnitude, resulting in over-indebtedness or excessive savings. While others underestimate themselves, they place a portion of their money in savings at a much lower rate than is necessary and justified.
In both cases, it causes material damage to itself. So it is very important to talk about self-critical financial attitudes in financial literacy.
# 2 A good product
In the past few years, the MNB has taken very strong steps in this area, but there is always room for improvement. Unfortunately, the current financial market is still about focusing on explaining the product rather than product development . This is a very strong criticism of the market, but it is more true and real. Unfortunately, whatever contract we want to make (be it a current account), we always have to pay attention to when they want to guide us to where the small loopholes are placed.
I would very much welcome the development of financial culture if the concept of a good product spreads across all areas, that is, service providers see their vision and profit not in the guiding and the tiny parts, but in transparent, clear, more favorable products, which can be done in larger quantities and they can sell at a lower rate.
You have to understand that average people want simple things:
- want an apartment
- want a family
- want health care
- want a pension
- want to save
They want them, and with little exaggeration they are not interested in the realization, the only result. That is why a good product is not infinitely complex, but simple, easy to understand and transparent. From this point of view, I know of a single “good product” at the moment, which corresponds to these criteria, and is the housing savings that are infinitely simple, transparent and understandable.
# 3 A good advisor
And then we come to the third most important actor we need in an advanced financial culture. In recent years and in the future, the legislator sees “educating” and differentiating good advisers to reduce commissions on products to the extreme. This was the case, for example, with a nearly 50% cut in mortgage commission, while administrative burdens and responsibilities were increased. In return, the loans were not cheaper, and even on the day that the law came into force, several banks raised interest rates, as the “bridging” of the credit intermediaries would put more and more burdens on the banking system, as there would be no pre-filters for customers.
I think the market has a self-regulating role here as well. The better the products and the more informed and informed the customers, the better the advisors will be, as the market forces them to develop. And this is the key: a good advisor is constantly evolving and getting better. Because the legislator takes a significant portion of his commission, while the publishing page (GDPR, online appearance,… etc) increases, he does not get more advisers but less time for consultants. dealt with because of the increasing ‘commission constraint’ if they want to live.
And infinitely conscientious, correct. Though this profession is about numbers, I still believe that emotional-based financial counseling exists, based on emotional economics. That is, we consider and appreciate the consultant as a person. Man who feels-thinks and lives. They can have both good and bad days. These are qualities that no diploma can detect. I am convinced that the real standard of a good counselor is not the number of diplomas but the person. Because an agitated, multicolored man can misuse his knowledge and scam us. A less paper-based, though conscientious consultant, but never going to do so with intent.
The market’s biggest problem with communication is that, as most consultants have contracted, the attractive, real-time communication with the customer is eliminated. From then on, the customer does not react immediately, but days, weeks later. This is completely incomprehensible to me, as being a financial advisor for someone means a kind of commitment and responsibility. The adviser has moral responsibility for the products offered, so it should be available even if there is no clear interest in it.
Assignment can be manifold. For example, I decided years ago to try to pass on all the existing information in my blogs to people so they could make the right decisions. Since I often pass on the knowledge gained over many years of experience, I draw attention to important things, so I definitely value value. Of course, there are many ways to add value. The goal would be for everyone to understand: financial culture is being shaped together, where there is no place to hide information.
He thinks in strategy
A good consultant thinks strategically and not in products. Never adjusts the customer’s goals to the product, but the product for the customer’s purpose. Because he knows the inevitability and importance of long distance. That’s why you never leave it to the customer when it starts in the wrong direction and, in its suggested designs, it wants to relieve the problem rather than solve it.
And the most important feature of the ideal advisor is honesty and outspoken. Since this is a peer-to-peer business relationship (it should be), you should occasionally take the conflict with the client. You can’t always nod like a puppy in the hope that the customer will do something. You have to say face to face if something doesn’t work, because it is not good for anyone to get a wrong conclusion and start in a direction that will not serve your purposes.