OPINION | Despite the tremendous importance of retirement planning to the long-term financial security of the working population, the majority of Australians tend to neglect their superannuation funds throughout most of their working lives.
The Productivity Commission’s recent draft report into alternative default models highlighted Australians’ indifference towards retirement planning. Among the report’s findings was an indication that two-thirds of the working population does not nominate a super fund, opting to stay within default funds without looking into alternatives.
This seeming lack of interest not only reduces the likelihood that people will be aware of the potential savings and benefits that may be available to them, but also means they may not be able to plan their retirements effectively.
For example, more than 50 per cent of Australians now retire on a date not of their choosing. In addition, research from global banking and financial services firm HSBC showed that a staggering 41 per cent of Australian pre-retirees do not receive any retirement advice.
With the Productivity Commission recommending a substantial reduction in the number of default industry funds, the sector will have to substantially revise engagement approaches in order to reverse apathy and help members.
Technology for earlier engagement
Sole reliance on conventional customer engagement tools, such as workshops, seminars, leaflets and meetings, requires significant financial investment from providers and time and commitment from members themselves.
This has meant that these member tools and services have typically been sought out by members when retirement is looming and by then it is too late – and if there is one golden rule the tools and education services preach it is to start early in life.
This is where technology – particularly digital financial advice combined with data insights – can make a real impact. Proactive, fully compliant financial advice delivered to the consumer’s palm-top device can help reduce the apathy that plagues the industry.
Enterprise-level digital advice technology removes the perceived complexity of the subject matter and enables customers to take control and act on beneficial advice with simple clicks.
Digital advice allows users to bypass any potential sensitivities they may feel when consulting a human adviser. Those who have limited knowledge about the basics of their own savings goals or liabilities may feel too embarrassed to talk to a professional and therefore switch off from engagement.
We see evidence of this in the low take-up rates for highly subsidised face-to-face or phone-based human advice sessions. In fact, we are starting to understand that it is these barriers that are responsible for the apparent lack of interest in superannuation, rather than people simply not caring.
Technology has improved efficiency and changed the way many functions are accessed and performed in all walks of life, and super providers that have adopted digital advice are seeing technology have the same impact on financial planning.
Decimal’s digital advice platform is available to thousands of everyday Australians, via a growing list of superannuation clients. We have seen sustained growth in the take-up rate by users, and many make multiple return visits. This demonstrates that users are engaging with the technology how and when they want– bypassing some of the issues associated with traditional tools.
Funds can offer meaningful advice to customers without requiring those customers to make much effort. Members will receive proactive notifications about what could be done to improve their situation – drawing them in to investigate further.
Digital advice will be critical in changing Australia’s approach to superannuation, by taking the hard work out of retirement planning and making it quick, easy and efficient.
Jan Kolbusz is the founder and executive director, strategy and innovation, at enterprise digital advice technology provider Decimal Software.