Retirement projections key to super engagement

4 December 2012

| By Staff |

Research has shown projections are the number one thing that drives consistent action and engagement from members according to Donn Hess, JP Morgan Retirement Plan Services' US managing director and head of product services.

Speaking at the Association of Superannuation funds of Australia (ASFA) conference, Hess said behavioural finance and retirement projections had a large role to play in the battle for member engagement.

When funds shared retirement projections, people were 19 per cent more likely to have income replacement at 90 per cent or more and were 37 per cent more likely to invest in a diversified strategy, he said.

"It is by far the leading thing we can do to get people to first and foremost understand what they have and secondarily if they aren't comfortable with what they have, take the steps they need to," he said.

VIEW ALL

View all

Super fund trustees in the US struggled with the right metric of success, Hess said, because traditional metrics such as balance, savings rates and asset allocation were misleading.

"As a trustee we look at the absolute value, but the measure that we hold ourselves to is not that absolute value, it's how it changes over time.

"The right number doesn't matter, it's how that number improves that matters and that's the value that you're showing as a trustee, that's the engagement that you want from members," he said.

Behavioral finance could be used to drive members to make the "right" decisions, he said, such as limiting or compartmentalising investment choice.

People would delay the "healthy" option unless they saw the benefit to them - which is where retirement projections fit in, he said.

AUTHOR

Staff Writer

Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.

View articles by Staff