Research
A large part of our research is around finance and financial decision making. We are currently developing two projects in this area. Personal Financial Capacity and Banking and stock market decision making.
Personal Financial Capacity
Who is to blame for the credit crisis? The Government? The banks? Advertisers? Society? The individual?
An estimated 40% of people in the UK have more money going out than coming in, and that percentage is growing. There are around 13 million people in the UK with no, or at least inadequate, pension provision. Why?
The simple answer is different earnings. But some of those who have big debts and are stressed and unhappy are paid over £200,000 a year, while some who have no debts and are perfectly happy are below the national average earnings. So that simple answer can’t be right.
Other reasons that are frequently given for these figures are that
- Credit is confusing and tempting and it should be less available.
- People are not financially sophisticated so they need to learn all about financial products.
- Financial products like pensions are too complex, they have to be simplified.
While these are quite reasonable ideas in some ways, our research to date suggests that there are other factors involved, and there must be other answers.
- It is rather hard to believe that nearly half the population don’t realise that when they borrow money they will have to pay it back, so it might be tempting but it isn’t confusing, so something else must be going on.
- The bank leaders are financially sophisticated, but they got things wrong to a greater degree than anybody else, so financial sophistication alone can’t be the whole answer.
- Most people prefer to have things now, rather than have an intangible promise of maybe getting something at an indeterminate point in the future. Therefore, not having a pension or other savings is more likely to be due to well-known humanity rather than an unbelievable level of ignorance and complex products.
Basically, if 40% of people have debt and cash-flow problems, that means that 60% don’t. Since the complexity of products and the availability of credit is the same for everybody, and neither earnings nor financial sophistication are the answer to staying out of trouble, what is it that distinguishes the ones who don’t have problems?
So we’re planning to do a study.
We want to find out what attitudes and behaviours help people who don’t have out of control debts to be that way, and how they differ from those of people who do have problems with their money. Then we want to teach people how they can be more like the “in control” group.
With the cooperation of charities, Credit Action, the Resolution Foundation, The Division of Occupational Psychology of the British Psychological Society and academic support from Goldsmiths College, University of London, we're setting up a study to examine the issues.
You might want to take part in the study. It isn't trying to sell you anything and is confidential. If you take part, you will get a personality questionnaire feedback as a “thank you”, as well as finding out about your own attitudes to finance.
Taking part in the study
If you are interested in taking part in the study and you would like us to contact you when the study goes live, please enter your email address in the box below and click the Include me in the study button and we will be in touch with all the relevant information.
Banking and stock market crises
We can explain why the banks crashed. If you want an explanation, we have a very clear, half day presentation that goes through the relevant details that we’ve delivered to various organisations.
What we aren’t sure about is why some banks and financial organisations were badly affected but stayed solvent, while others collapsed completely – when all had to make the same decisions about exposure to risks and all of the boards of the companies have similar backgrounds, education in understanding the risks and all have risk management departments (that they uniformly ignored).
So we’re planning a project to find out. We want to discover what it was that allowed some groups of financial leaders to pull back from the brink, while others fell off.
This project is still in the very early stages, but we are in contact with the Financial Services Authority ,the Financial Services Research Forum and other organisations to obtain access to key individuals.
If your organisation would like to understand the bank collapse and how the principles might affect you, please contact us.