Ollie Smith: We've just come off stage here at Morningstar Investment Conference UK 2022, but I'd like to ask one of my panelists, Ruth Handcock, CEO of Octopus Investments, for her thoughts on why it is the advice industry is perhaps underserving potential clients.
Ruth, thank you for joining me. I just want to touch on the topic of property. You think that the notion that younger investors don't want to buy property is misplaced, don't you? Why?
Ruth Handcock: So, Octopus recently brought a business into the group called Octopus Moneycoach that provides coaching to people at all stages of their life. And we find amongst those who are just starting out on their careers is there's no difference in aspiration to own a property. It's just that getting there probably feels a bit harder than it did for previous generations. So, there was a stat we looked at earlier that showed how many people were born in rented accommodation. So, a lot of people's only experience of property is renting. But yet whenever you say to people, are you interested in investing? They'll say to you, I'd really like to get into property later. I think the British has an obsession with it as a safe haven, and they see it in the boomers, they see it probably in generation X and want to be part of that.
OS: Okay. And just in terms of other underserved areas within the group of potential clients that Octopus indeed and other businesses might want to serve. What do you know about the gender pension gap and how much potential is there?
RH: I think there's huge potential. So, there's without doubt a gender pension gap. I think we have to look back in the gender pay gap as the root of that. So, someone said to me the other day that as a woman your pay can plateau on average from the point that you turn 35, which is an astonishing fact. But then, that is exacerbated by the fact that women are less likely to invest. So, we all know, obviously, the compounding benefit of investment. There's a compounding disadvantage if you don't invest. That means that that gender pay gap turns into a much bigger gender pension gap, which I think is a real challenge.
OS: And just finally, on Octopus Moneycoach, I mean, what's the logic to the business model? And we were talking on stage specifically about the issue of scale and profitability. You potentially be serving kind of a less profitable per head group of people, which means that you might have to have more people in your client bank. So, how does that work from a sort of mathematical point of view?
RH: Yeah. I mean, I think there's just a wonderful opportunity of scale that the financial planning industry serves about 800,000 people brilliantly. But there are millions of people that want help with their finances that don't currently know where to go, and probably aren't quite self-directed enough that digital alone is the right answer for them. So, what Octopus Moneycoach does is it allows you to have a one-to-one personalized session with someone to help you work through a money plan. But because we don't offer regulated financial advice in those sessions, we can provide them at a lower cost to people with lower investable assets than a planner would typically serve. But there are many, many more of them. So, actually, it's a business that with the right digital infrastructure sitting behind it can be really huge. And so, you can build a nicely profitable business. It just has a slightly different shape from a typical financial planning firm.
OS: Okay. Cool. For more coverage on Morningstar Investment Conference UK 2022, check out Morningstar.co.uk. Until next time, I've been Ollie Smith for Morningstar.
