Why we need to change how we talk about superannuation

Mike Goodall, Corporate and Industry Fund Sales Manager at Ignition Wealth has over 30 years experience working with retail and industry superannuation. Mike has a real passion for helping the industry super funds to connect more meaningfully with their clients. With record levels of disengagement the industry is ripe for disruption and Mike is committed to helping the superfunds revolutionise from inside, through the utilisation of the best emerging technologies.

It’s no secret member engagement is the biggest challenge facing the superannuation industry in Australia.

Despite collectively having more than $2.1 trillion invested in super, the majority of people don’t view superannuation as an investment or nest egg – at best they are disinterested but aware of their super; at worst they are completely disconnected and disengaged.

While working Australians should arguably be more aware of their own financial matters, part of the blame must fall on the industry which has failed to grow a culture of engagement through communication.

In particular, there is a disconnect between how those in the super and financial services sector believe the average Australian thinks about their super and how they actually think about it.

Painting the wrong retirement picture

While some industry super funds have recently portrayed their members in more realistic ways, the imagery and language used in most advertising is more likely to show a couple sailing the Caribbean on their luxury yacht or sitting on tropical beach sipping cocktails gazing into the sunset.

For the average Australian who has $50,000 to $60,000 in their super, this type of “retirement lifestyle” simply isn’t aspirational, let alone realistic.

In short, the industry talks to people as if they’re earning the money of financial services executives, rather than truly understanding what Joe Blow earns in a year and what his dreams of retirement look like. It creates a relativity issue in the imagery and communication used to encourage people to engage with their money and ultimately scares them into thinking there’s no point caring about their super as they’ll never reach this idealistic end-point.

It makes sense why this aspirational imagery is used, but it’s like showing someone who needs to lose a little weight a photo of a bodybuilder to encourage them to exercise; realistically they only need to lose enough weight to live healthily, and the amount of work required to get to the level of a bodybuilder is overwhelming, so they give up before they start.

Instead of painting a picture of a luxurious retirement, the language used to communicate about super and retirement planning needs to change. The majority of super fund members won’t get anywhere near that level, rather they should focus on setting modest goals such as paying off their mortgage, living debt free and having enough money to live comfortably. It’s not sexy, but it’s reality.

The future of engagement is digital

A lot of work has been done to try to improve engagement with super, with everyone from the Australian Taxation Office to super funds rolling out various tactics to get people interacting and caring about their money. While these initiatives have had varying success in relation to superannuation, such as the ATO’s push for workers to consolidate their super into one fund, they haven’t tackled the overarching problem.

As we stand at the end of 2016, there is no end-to-end solution that simplifies the process for super fund members who want to manage their money. Digital innovation is required to allow members the ability to not only view their balance, but easily interact with their nest egg; change investment options, make voluntary contributions, update insurance options, etc. Their investment needs to feel tangible and they need to feel ownership over it; it needs to be part of their broader financial outlook and needs to be brought into the spotlight for them earlier (not just in the years immediately before retirement).

While some of this is possible, too often members can take the first steps towards making these changes online but to complete it, they need to physically contact their fund or employer and fill in a form to make the change. This is merely another hurdle they need to jump over to reach a resolution that should be simple and at their fingertips.

Once that connection stops, the motivation drops and it gets put in the “too hard” basket.

The financial services industry has the wherewithal to tackle this digital end-to-end problem; for the most part the tools are already there, but processes are siloed and unnecessary regulations are preventing a free flow of information to truly allow people to interact with their money the way they want and need to.

Until changes are made to improve the process, it’s difficult to improve superannuation engagement to a level that will really make a change in how people interact with their money.
The industry superfunds serve some of the most worthy industry sectors, often people who serve the community throughout their working lives and deserve a retirement that is both safe and happy. In my role at Ignition Wealth I’m committed to working together with the funds to provide the very best and the most appropriate solutions.