Speaking to FTAdviser, Caroline Murphree, who joined the firm from Wealthsimple in July, said Moneybox’s mission at the moment is trying to help people build their wealth.
“It's more important than ever but obviously it is something that people are grappling with right now,” she said.
“We really do try to encourage people to be making weekly deposits and contributions into their account and we have actually seen that be relatively resilient. That's a really positive sign.”
She explained Moneybox is talking to customers who may be facing financial difficulties to provide some input on what they could be doing.
“[If this is] to the extent where they are facing tensions of being able to afford basic things, then you can reduce contributions, but still continue to make them so that you are building those longer term pots.
We need to change that we need to help people really understand that it is their money.“That is a good way to try to balance the near term challenges that you're seeing today while also trying to keep an eye on the longer term.”
She added: “We do feel quite strongly that financial resilience is actually about building wealth throughout your life. It's not just about having a rainy day fund, although that is a very important part of it.”
Murphree explained that Moneybox is trying to see how it can, as an industry - alongside the likes of advisers - help people understand the tradeoffs they are making.
“There are going to be real pressures on energy costs, food costs and more but its important to help them understand that even if it is £10 that you're putting into your pension, that £10 will be worth a lot more in 30 years time than it is today.”
The firm is trying to help consumers understand how to prioritise their rainy day funds in the short term to help manage current costs and not lose sight of the longer term as well.
Murphree explained that although people are very excited to be seeing interest rates - at least on the saving side - inflation has gone up much more than savings.
“In real terms, you're still doing worse. If inflation does peak in January, as I think the Bank of England is now predicting it will, and those savings rates continue to go up, they will become stronger in real terms.”
They see [the pension] as something that is provided to them by their employer, and then they don't really think about it or touch it for 30 years.Moneybox would normally communicate to customers that if they are investing, it needs to be on a three or five-year term or sometimes even longer.
“The way that we generally think about it is that if people are making those regular weekly, or monthly contributions, they should be benefiting even in moments like this from pound cost averaging over time,” she said.
“At the moment, if someone believed that markets were undervalued and likely to rise, it would actually be a good time to be putting in more money, but we can't predict the future.”
She urged that the industry needs to help people understand and take advantage of the opportunities that may serve them better in different time horizons.
Consumer attitudes
Murphree also said that the other thing with pensions or ISAs is how consumers can be helped to ensure they are getting the most out of the benefits of those wrappers, the tax relief, or government bonuses.
These benefits will help savers achieve their financial goals more quickly, even in an environment where they cannot necessarily put as much aside themselves.
She said Moneybox conducted a piece of consumer research in August, looking at attitudes towards investing, which revealed that while nine in 10 millennials have given thought to how they're going to plan for their retirement, about two thirds do not know how much they need to save to fund that.
Six in 10 do not know how much they already have saved and seven in 10 (68 per cent) do not think or do not know if they are on track.
“This is an incredible number given that millennials are now late 20s to early 40s and it is a time when hopefully they have met some of their early savings goals and are now turning their attention to the longer term impact of their pensions.”
She explained that the industry for a long time has been difficult to understand.
“The employer is the one that selects the pension provider and often selects a certain subset of funds that may be available to that group and people don't see that money therefore is their own somehow.
“They see it as something that is provided to them by their employer, and then they don't really think about it or touch it for 30 years.
“We need to change that we need to help people really understand that it is their money and that they need to be interested in how it's invested, how much they're paying in fees, and how it's performing over time to make sure that it is going to be there to meet their long term needs and goals.”
Murphree said Moneybox has been running a campaign to take customers on a journey from understanding how to get started such as finding out where everything is and figuring out how much they have saved.
“One of the other big challenges we see often is when people think about saving for retirement. If you think about it as this one final instinct number that you're saving for, which is a very big number, people can find that really intimidating and overwhelming.
“So what we wanted to try to help people do is think about not just what's the big number, but actually to think about how can you set shorter term goals that will get you on that right path and take advantage of all the various employer contributions that will also help you get towards that number.”
Given it is a topic that a lot of people find overwhelming, she said Moneybox is trying to see how it can simplify it to help people see how saving a certain percentage of income every year can help that individual get there
The future of Moneybox
Murphree said Moneybox sees a lot of potential in hyper personalisation and technology.
“The more that you can actually try to help understand an individual's specific circumstances and provide them with information that is relevant to those circumstances, the more helpful and less intimidating people find it,” she said.
“We can use many things like machine learning techniques to look across the whole population as whole, to help understand what is going to help drive the best outcomes for people depending on their relative position within that data set.”
She said Moneybox is trying to serve the mass market and therefore people can get started from £1 as there are no minimums.
“The thing that really differentiates Moneybox in our proposition is we really are trying to be a wealth building platform so the breadth of products that we offer from savings, investing, retirement and home buying, so we bring all of those needs together under one in one simple app.”
sonia.rach@ft.com
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