Posted by Charles
Money’s fallen on hard times. It’s not breeding like rabbits any more.
What’s bad news for savings has got to be bad news for funeral plans too.
Pay now, die later was never going to be a good way to go for the funeral trade because when a person buys their own funeral it is generally more modest than that which he or she might buy for someone else. But if you can’t improve your market share today by encouraging more people to die and afterwards give you repeat business, what’s a poor undertaker to do? Tomorrow’s market share it is. Sell ahead, grow the cash, hope it pays you back.
In present low-growth conditions, the longer a plan takes to mature, the more it’s likely to lag behind.
The April edition of the Funeral Service Journal carries a heartsinking analysis by Ronnie Wayte, managing director of Golden Charter. Given low interest rates, these, he says, are the most disturbing factors:
* Funeral price inflation tends to outstrip RPI. (At the present rate, funeral directors’ costs tend to double every ten years.) Says Wayte: “Put bluntly, parts of our model don’t work in these conditions.”
* People are living longer, increasing likely shortfalls.
* People are buying when they’re younger, extending the maturity period.
* Sure, the death rate will rise soon. But the fruits of this will be shared among increased numbers of funeral directors.
* “As financial services giants become more involved they will squeeze returns.”
No wonder Wayte concludes by saying “we need to step back, have a good look round and decide in what direction we need to move.”
I’m sure he’d welcome some advice from readers of this blog.