18 July 2019
Curtis Parker: “Our members like the fact that we are transparent, and it is clear where we are investing their hard-earned money.”
There are often preconceptions surrounding friendly societies, our products and the services we offer.
We caught up with Business Development Officer, Curtis, who dispelled the misconceptions and talked us through the most common questions he faces on a day-to-day basis.
What are the most common questions people call up to ask?
CP: One of the main questions we get is: ‘what interest rate do you pay?’
We always take our time to explain to potential new members that we don’t pay interest on our products - we pay bonuses. We operate like a bank or building society, but unlike banks, we don’t have any shareholders to pay so we are able to share our profits with our members based on how well our investments perform.
What we state is that some of our bonus rates might be comparable with bank or building society interest rates. For example, the Investment ISA is the most comparable product with a headline annual bonus rate of 4.50% and annual management charge of 1.50%. We’re effectively delivering around 3.00% after charges on the Investment ISA which is easily comparable with bank or a building society interest rates paid on cash ISAs, albeit with slightly more risk. Ultimately, we aim to better the potential return clients are used to when saving on the high street.
“We operate like a bank or building society, but unlike banks, we don’t have any shareholders to pay so we are able to share our profits with our members”
CP: Another query we often receive is: ‘where do you invest my money?’
Being a member of a friendly society means that everyone’s money essentially goes into the same pot and then as a Society, we invest that in a range of different areas to minimise and spread the risk and to protect members from the ups-and-downs of investing. For example, we invest in things like commercial property, stocks and shares, government gilts, fixed interest and alternative assets – this is known more commonly as ‘with-profits’. We hold a diversified mix of investments and invest in areas which individual investors might not normally have access to. The Society aims to make a return on our investments each year and after accounting for the costs of running the Society, we share our surplus profits with members through annual bonuses. Our members like the fact that we are transparent, and it is clear where we are investing their hard-earned money. It’s positive in an ethical way too as we aim not to invest directly in industries relating to armaments, tobacco, gambling or pornography.
CP: We also frequently get the question: ‘is my money protected?’
The Financial Services Compensation Scheme, which is the statutory scheme in the UK, covers deposits with a bank or a building society, meaning if you have a cash ISA or a current account with a bank, you’re covered up to £85,000 per institution.
While we are a member of this scheme, we’re different in terms of the products we offer in that they’re classed as long-term life insurance products, so members are covered up to 100% of a claim with no upper limit. If you had £100,000 savings in a bank and that bank was to fault, you’re only covered up to £85,000, whereas with us, you’d be covered up to 100% of the full value. This is something members might not always be aware of at the outset but essentially, their money is safe with us. This is an important point for us to convey during conversations with members and we get the impression that they trust the Society with their money.
“There is always someone on the other side of the phone who cares and knows exactly what they're talking about”
What misconceptions do you come across?
CP: Our Investment ISA is frequently advertised in digital and print and many people automatically assume it’s a cash ISA, but these types of ISAs are only usually available through a bank or building society.
In our case, we invest around a quarter of our members’ funds into the stock market, so we must be clear that our ISA is legally classed as a stocks and shares ISA. However, we like to think that our ISA is a hybrid of a cash ISA which has little to no risk and a traditional stocks and shares ISA which can be anything from low to high risk depending on the choice of fund.
The Investment ISA has paid a net annual bonus of at least 3.00% over the last five years which we feel is a very competitive rate in the current climate for a low-medium risk product. We market the Investment ISA as a stocks and shares ISA ‘with a difference’.
Any questions that you’ve found unexpected?
CP: Sometimes we get people calling our office from outside of Yorkshire asking whether membership is only available in our region. I had a gentleman phone me from Staffordshire recently asking if membership was available for someone in Stoke-on-Trent, which of course it is. We have members nationwide and although we have a focus within our Yorkshire heartland for our print marketing, membership is open to anyone across the UK.
Members also like to know what they are likely to get back and whether there are any guaranteed returns on their savings and investments. We can never fully predict how investments will perform but most of our products include built-in guarantees for extra peace of mind which is attractive to most cautious investors.
Many of our lump-sum investors also appreciate the fact that some products include death benefits as standard.
What kind of feedback do you typically receive?
CP: We generally receive very positive feedback. We’ve recently set up a reviews.co.uk page to allow potential customers to gauge other people’s experiences. We always strive to answer the telephone within two rings, so people are quite surprised that there’s a real person on the other side of the line. We’re often told it’s refreshing to speak to a person within seconds of picking up the phone because it’s common when calling larger organisations that you have to wait and press a lot of buttons, which can be frustrating and time-consuming. We provide full training to all staff so that they are knowledgeable about the products and services we offer. There is always someone on the other side of the phone who cares and knows exactly what they’re talking about.
“People like to be treated like a member rather than a number.”
CP: We like to focus on customer service as we want members to become advocates and pass on referrals to their friends and families; in fact, we’ve just enhanced our Tell-a-Friend scheme where members can introduce new people to us. I think people like to be treated like a member rather than a number. We build strong relationships with our members and know many of them by first name and we always know who we’re speaking to. With a bank, on the other hand, you don’t always get that relationship with the person on the other side of the phone. We don’t have time limits on our calls so are able to speak with members as long as necessary, within reason. It's all about service, really. We’re not commission-based and are not paid for converting business, and we’re not sales-orientated. It’s more about addressing what the member needs, on their terms.
This blog provides generic information and opinions of the writer and should not be relied upon for making investment decisions. No advice has been provided by Sheffield Mutual. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk or www.vouchedfor.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand. Any reference to taxation is based on the writer’s understanding of current tax legislation and practice, which could change in the future.