Are investment products ever right for the mass market?

When financial services companies try and give the hard sell on a product, it's invariably bad for their customers. Because they're dealing with finance, they have to shout louder than they might do if they were selling a luxury car or some other product that their potential customer was engaged with.

They also have to try and focus on the benefits - that's the nature of marketing. But in doing so, they tend to neglect to give adequate attention to the negatives. And when it comes to financial products, it's more important than other purchases to understand exactly what you're getting into, as the consequences of getting it wrong can be much greater.

These days, most financial advertising is about building a brand, rather than flogging a specific product. But there are still companies who persevere with trying to market financial products directly to customers. When criticised, they often make the case that if they did not push as hard as they did, fewer people would buy investments and insurances - and ultimately, that would be bad for society as a whole. Actually, I'm not allergic to this way of thinking, but if you're going to push on down that path, you need to ensure you're marketing products that decent value and are suitable on some level for the majority of people. In reality, few of the products that are mass-marketed tick these boxes.

A risky road

One of the most prevalent examples of direct to consumer product marketing these days is for guaranteed over 50s plans - with Axa, the market leader, spending millions of pounds on its TV and press ads fronted by Michael Parkinson.

I've written before about my skepticism around financial companies using celebrities in their marketing. But far from pulling back from its direct approach, Axa's latest move is to expand its direct to consumer Sunlife brand (complete with a redesigned logo) and push on into other product areas.

The main feature of its new product suite is a with-profits stocks and shares ISA - a product which it claims it is launching in a bid to try and get more people in Britain saving. But for the mass market - customers who are generally less affluent and not particularly knowledgeable about finance - its choice of product is far from ideal. With-profits funds are both complex and opaque - and can be expensive to boot. While they can work in the pensions market - where you're locking up money for decades, and have a target date for drawing it down - they are much more problematic in the world of medium-term savings, and are rarely the best solution.

Delivering the impossible

Axa claims that it's gone back to with-profits because this is still the product that best encapsulates the features that customers say they want when they invest. But surely everyone knows that when you ask customers what they want from an investment, they describe the impossible. They want something that will grow by more than a savings account, but which can't lose them any money. In a nutshell, they want reward for no risk.

But if that's the answer you give, then the truth is that you're probably not ready for investing. We all want a better return on our money. But if you've only got a few thousand pounds in savings, and are only looking to put it away for between 5 and 10 years, then you're probably better off putting the money into a fixed term cash ISA. At least this is essentially risk-free and does not come with charges of over 1.5%.

I'm happy to take Axa's stated ambition at face value, and to believe that this is not all being driven by pound signs and the bottom line. But it's a high risk strategy, and I fear even with the best of intentions, there's a good chance they will drive poor outcomes for many customers.