Member advice gets ‘appy’

How many apps did you use yesterday? Better question – how many apps did you use before 9am?

Unless you’re particularly disciplined, chances are you engaged with anywhere from three to 20 apps before you even made it to your desk. Perhaps you checked your email and calendar while still in bed. Glanced at your favourite news apps over breakfast. Asked your home speaker to predict the weather to see whether that umbrella was needed.

Paid a bill or transferred some cash as you made your way to the car or station. Listened to music or a podcast on your commute to work. Connected in with a social or professional group chat as you walked. Ordered a coffee from your local to be ready on arrival.

That’s 10 apps in the space of a couple of hours. And you haven’t even switched on your computer yet.

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Apps have radically transformed the way we live. Having been emancipated from computers some years ago, they’re now present in almost every part of our lives – on our phones, our watches, our cars and in our homes.

And while we could, at times, do with a break from all this 
technology – the fact remains that for the most part, apps have made our lives more productive and more connected.

HUNGRY FOR HELP

The financial services world is no different.

Increasing amounts of research have found super fund members are actively looking for apps and tools to help them make the business of managing their money and planning for the future simple, easy and integrated into their lifestyle. So, can super funds afford to ignore this?

A global study by Accenture found that seven-in-10 consumers would welcome robo-advisory services for their banking, insurance and retirement planning. It also found that nearly two-thirds of consumers still want human interaction in financial services. Just recently, two surveys from the UK, have also highlighted a real need for technology-driven automated advice services.

The second interesting study was from UK-based life and pensions provider Scottish Widows which pointed to changing customer engagement preferences and a desire for online guided advice.

The Scottish Widows research found 24% of 18-34 year-olds said they wanted their financial adviser to offer real-life scenario exercises for situations such as marriage, divorce, and having a family. This number was four times as many as those over 35. Those aged 18-34 were also much more open to new forms of communication.

The research suggests that developing new ways to meet the needs of younger clients could re-shape the way funds deliver advice to members. And as members seek more options and flexibility, some advice and planning models will need to adapt.

MODERNISING BUSINESS MODELS

Providing regulated, ongoing advice can be a lengthy, complex and costly process. However, it can sometimes be more costly, complex and time consuming than it needs to be.

With these changing member engagement preferences and increasing profit margin pressure, super funds need to decide how they can modernise their models to compete more effectively. They need to decide if they want to roll with the changes and take the opportunities that present themselves, or step aside and have change happen around them.

While some funds have embraced segmentation and recognise the level of service the various segments require, others have not. At some funds, all members get the same service. Often an extensive manual service – and often more complex than they need.

At a time when the super industry is grappling with heavy regulatory demands, this approach can create business inefficiencies that have the potential to further eat away at productivity and erode the ability to reinvest in the interest of members.

But it’s avoidable. In our experience, it’s not a lack of awareness or desire to change that is hampering progress. Instead, it’s a need for truly effective tools to help super funds provide more streamlined, cost-effective alternatives.

DIGITAL TOOLS FOR E-LEARNING

A November 2018 report by the Centre of Excellence in Population Ageing Research at UNSW found that increasing financial literacy was critical for driving positive behaviours when it came to planning for retirement.

Its research found that people with high levels of financial literacy planned more, saved more and invested more in the sharemarket. What’s more, they estimated that 30-40% of retirement wealth inequality stemmed from a lack of financial knowledge.

Super funds conscious of supporting their members to improve their financial knowledge need look no further than the vast range of e-learning apps and tools now available. Here, the emphasis is on making learning accessible, relevant and – dare we say it – fun. 

Super funds should be leveraging unbiased, fully customisable, financial content resources to do the heavy lifting for them. Pre-built and ready to go, these online resources contain a wide range of content suitable for members in all stages of their retirement planning journey. All content should be written and approved by industry experts and may be brought to life using animated videos, self-paced learning modules, quizzes and articles which are both credible and topical.

Members access the content through their member portal, on their device of choice.

The advantages of financial learning apps and tools to members are enormous - increasing confidence, reducing stress and providing members with both the information and skills to take control of their finances. Super funds benefit too through improved attraction and retention of members and reducing the risk of members falling victim to unscrupulous operators. 

GUIDED ADVICE TOOLS

Increasing the financial literacy of super members has an additional benefit when it comes to increasing the likelihood that they will seek financial advice. And here is where technology has evolved to make it easy for super fund members to deliver a high quality advice experience to members at scale. 

Increasing numbers of consumers are now choosing to research and make financial decisions online. Automated personal advice enables members to research and execute strategies to help them achieve better outcomes.

Super funds can customise the automated advice to suit their members’ needs, with common areas of advice including enabling members to estimate how much money they will have in retirement, how much they will need and what they can do to bridge the gap. Using information drawn from the fund’s registry, automated personal advice provides both self-guided journeys through relevant advice strategies, as well as calls-to-action to promote members to take specific actions to ensure their goals are met. 

Automated personal advice enables members to explore and execute retirement strategies  without ever having to interact with a person – unless they want to, at which point they can reach out to the fund’s advice service for a more comprehensive conversation, guided by the information recorded in the tool.

Members value and rate the flexibility of this service highly. WA Super tells us that of those members who’ve used our personal automated advice tool, 30% have actively engaged with their super afterwards – such as by increasing contributions or making an investment switch. It’s not surprising then that 79% of members were either likely or very likely to recommend it to others. 

Adviser tools get smart

It’s not just member tools which have benefited from technology advancements. Financial advisers are also taking advantage of smart tools and apps to support their conversations with members.

Goals-based advice has risen in prominence in recent years, as advisers seek to create efficiencies in delivering advice for clients with simpler needs.

Smart software has been created to meet this need – guiding advisers through predefined client advice journeys – from discovery and goal setting, current position and strategy modelling, advice documentation, implementation, and onward to progress tracking and review.

Recommendations are brought to life via highly visual screens, making it easy for members to see everything from their family’s insurance gap to how comfortable they’re likely to be in retirement. Super funds leveraging tools such as this are able to maximise their ability to deliver advice to members in a robust yet cost-effective way.

THE RIGHT TOOL FOR THE JOB

As with everything in today’s digital world – the options are seemingly endless, with a universe of apps and tools available, all proclaiming to make financial planning simple and easy.

While it’s easy to be seduced by clever marketing, super funds wanting to take advantage of this new app-driven world should first get clear on their strategic objectives before looking to match those up with the right technology and tools.

Partnering with an experienced technology partner is also key. They can help super funds look critically at their end-to-end member experience and determine the right tools and services to efficiently manage both administrative and regulatory requirements as well as activities to build member engagement, loyalty and advocacy. The right partner will also be able to look for opportunities to streamline other aspects of fund management, freeing up time to focus on those activities that add real value to members. 

Jeff Hall is managing director – superannuation at Iress.