The internet has been empowering for many consumer decisions, but can it empower the public on retirement investments?

Anyone planning an overseas holiday can look at pages that rank hotels, restaurants and travel experiences in order of popularity and customer satisfaction. They can search for the most convenient and cheapest flights, for currency conversions and budget their finances. The outcome should be a much less haphazard experience than those made before the advent of the internet, but compelling evidence that it can do the same for retirement savings is not yet publicly available.

The ubiquity of the tale of investors who sold equities at the bottom of the market in January 2009 and then bought a year later shows the public does not have a great track record of managing its investments.  If we give people more information, more choices online, will they prove themselves inept in making wise investment decisions?

The dilemma is that everything in our society is leading us down the path of more information online. The Australian Prudential Regulatory Authority has created the product dashboard to allow the public to be more informed about fees and performance of investments for MySuper. For financial services giants such as AMP, too there is a market imperative. Their customers bank with them online, so they would expect to see their superannuation online too. The bank is soon to launch an APP that will enable customers to do this more easily. It will allow them to check their bank account, superannuation balance and insurance while looking at their phone. In conjunction with this engagement strategy, the bank has made target date funds the default for around one million of its superannuation members. An individual from age 22 will be progressively moved between seven funds that pass from high growth/ high risk to a more defensive portfolio by age 65. They will have constant access to information about the individual path they are on and whether it is leading them to a comfortable retirement income. AMP believes that this personalisation will make the public more engaged and more open to advice about the level of contributions they are making and when they are able to retire. The theory is highly seductive: that retirement planning will join all those other consumer decisions that we are more informed about and that we can make smarter decisions for. You would hope it would work, but it feels like an experiment or, if you like, an adventure.

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