I really admire this Rowlands chap. I’ve know him for the best part of 30 years and in all that time he has never been anything but a gent. He’s now a Director at NEST and I urge you to watch this video if you are interested in helping your staff or yourself to make good financial decisions about your later life.
What NEST is saying
Mark Rowlands talks for a battle for people’s attention and the barriers to getting people’s attention (what he calls behavioural bias’ – the things that attract us before thinking of pensions).
He is right to be sceptical about “engagement” as an end in itself, he talks of it as a tool to get people to do good things. Of course engagement could go the other way and lead to self-harm. I have been making these points to my staff, it is not enough to have AgeWage as a minimum viable product – it must be a minimum “virtuous” product – engagement must lead to something good (not self-harm).
Rowlands defines the three positive outcomes he wants from engagement in terms of think, feel and do.
Rowlands goes on to talk about how he intends to impose on his 7m+ members and battle for their attention.
Here the key word is “personal”. Getting personal with 7m+ people isn’t easy, you have to find the right time to talk to them, the right content to put in front of them and the right call to action – to set them off doing good things. I guess this roughly ties in with “think- feel – do”.
To get engagement and get things doing good things from it, Rowlands concludes you need the right personalisation. But to do this 7million times, you need technology to help you. To use my terms – Mark needs more than viable engagement, he needs virtuous engagement.
Why this makes sense
The 7 million NEST savers are never likely to take advice on their savings, they will have to work out for themselves
- When they save (including whether and when to opt-out)
- How much they save (including lowering as well as increasing savings)
- Whether to transfer (both to and from NEST)
- How to draw benefits – whether through an annuity, professional drawdown or ad hoc,
- Some people will even feel they need to choose the NEST fund they want to be in.
So far, NEST has worked on the basis of minimum engagement. 99% of NEST members use the default and NEST doesn’t see much in the way of decision making on contributions, transfers and fund switches.
This will change – very slowly – as people get towards the end of their savings careers, want their money back and find they have saved rather more than expected (it’s amazing how the money builds up!).
NEST needs to find ways of engaging, but it also needs the right content to engage with and it needs people to do good things (rather than self harm. All the bullet points above could have negative consequences as well as positive – saving more is not clever if it puts you into lethal debt for instance.
Compelling is such an interesting word – in the context of auto-enrolment. AE is of course the behavioural alternative to compulsion – the idea being that because we are not compelled to save, we feel better about our saving.
But in the other sense of the word – compelling can mean persuasive.
As with auto-enrolment, there is potential for harm in the word
NEST must be particularly aware of the responsibility it has, as the Government sponsored pension, not to become an agent of the state and overwhelm people.
Which is why it is so important that NEST works with outside agencies – such as AgeWage to find the meaningful content that allows people to take decisions without feeling overwhelmed.
Why Mark Rowlands video is important
The work that NEST and Mark Rowlands in particular – is engaged with – is so important. I think it informs the whole of financial services – not just NEST’s competitors. This work is critical to solving the FCA’s problems over the Financial Advice Market Review and the Review of Retirement Outcomes. It is critical to tPR who have a statutory objective to protect members. It is critical to single employer occupational schemes, to the work of providers struggling with investment pathways, it is critical to consultants looking at benefit design and engagement strategies.
We demand value for money from NEST. We occasionally see NEST at work, this is an example. I have often criticised NEST for delivering bad content of intervening in untimely ways and indeed of being overwhelming.
But I think in terms of tone, content and delivery, this gem of a video shows what NEST could do. It is of course very light on detail – it is only 3 minutes long. But for people like me, for whom finding ways of talking with NEST’s 7m+ customers is important, this video is timely, personal and compelling.