I was intrigued by an invitation on social media to listen to the views of Invesco and Nest Insight on how best to talk to members of a large multi-employer DC pension plan (like Nest). So thoughtlessly I attempted to log in to a webinar describing myself as a Nest investor (which I am).
I changed my audience type and logged in as a “professional adviser” (I could also have chosen to be “institutional”). This time no problem – I was the right “audience type”.
Which is really the problem with “financial education” – or “communications” as webinar panelist Sally Bridgeland would have it. Members of pension plans are like goldfish in bowls, forever observed but incapable of passing comment. Having graduated from goldfish to professional adviser, I am pleased to report that the seminar was very
interesting engaging. Just what risk I would have been exposed to , had I remained an investor, I will never know but I’m writing this blog as someone who “contributes” to Nest and is keen to work out how I can get my fellow contributors interested in their money. I say “interested” because I don’t think “engagement” is particularly engaging.
Here is a headline finding from the webinar.
The message is that most of us
goldfish investors, don’t see pensions as something they “do” but something that is “done for them” and consider contributions as another tax coming from the deductions box on their pay-slip. Very few pay slips itemize the employer contribution as part of pay (something that Nest Insight might like to ask the payroll software programs to change). The Government incentive paid to all Nest contributors (regardless of whether they pay tax or not), is something that hardly anyone comments on, but it amounts to a minimum of 25% of the contributions paid and is one of the top deals that pensions offer.
The suggestion is that Nest contributors don’t engage because they are ignorant and unaware, but this is grossly unfair, speaking from the goldfish bowl, I struggle to understand my choices and get confused about what rules are imposed by Government, Nest or by payroll.
The webinar gives a number of instances that show how people react to different messages for change, most interestingly videos where we see audience engagement changing as differing messages are delivered. This summary of what works and doesn’t work is taken from research done by Invesco on UK savers (though it appears to emanate from Invesco’s Us research team and I suspect is informed by US experience.
There are observations throughout the seminar and accompanying report that illustrate the negative aspects of auto-enrolment, the disempowerment of the goldfish
And calls into question whether defaults aren’t infact advice
It is small wonder that more than 99% of Nest contributions go into the default fund when the conversation with the “audience” focusses on the correct language. I suspect that people have now learned the language of pensions to the extent that they know the “best description” is the longest and most technical word – “contribute”. But when not talking to the Nest Insight researcher, I wonder how many would revert to simpler expressions such as “save”, “pay-in” and “put away”. Listen to people talking on the Martin Lewis show and you won’t hear the word “contribute” very often.
My point is that when asked about pensions, people feel they have to use the language of pensions.
But a phrase such as “dream retirement” ‘is implausible because we understand enough about money to know it would take winning the lottery to have a dream retirement, people rightly think of pension savings as something they can never do enough of.
But to suppose that we can win hearts and minds through soft language skills is disingenuous, people need to be a part of the conversation , rather than being talked to, they need to be doing the talking.
There has to be a better way of winning people’s interest than struggling with spin.
A better way
People will be motivated to spend more time and money with Nest (and other workplace pensions) if they feel they are getting a good deal from making “contributions” (I am observing learned language protocols).
As well as being a pension, Nest is a heating controls system and it advertises itself to its public not through words but through numbers. The message here is simple, Nest will simply and elegantly regulate the heating of your house and you will see this is working through simple diagnostics that are easy to read and interpret.
Most importantly, these diagnostics tell you what is going on in your house right now so are “plausible” , “personal” and “plain speaking”. In her session as a panelist, Sally Bridgeland talked of Maths as a language and of numbers as the most precise means of expression.
There is a better way for Nest to talk to its members, and it should learn from its namesake. Nest should be focusing on simple numbers that tell its members how each member is doing. It should show the value of a member’s savings, how this has grown over time and how that growth compares to simply leaving money in the bank (or even relative to other workplace pensions).
People want to understand their pension in terms of numbers and ideally they want to see those numbers expressed in pounds and pence and not as percentages. They want to know what their savings can buy them and when and they want to know about their successes (free money from their employer, incentives from the taxman, free money from their investments growing).
Instead of being asked to spend more on their pension , a better way is to explain how their money has done so far and to use numbers as a prompt for future behavior.
The challenge of freedom
The challenge for Nest is whether to keep the goldfish in the bowl and observe or to let the goldfish into wider waters to make its own way.
Put in a less metaphorical way, Nest needs to make up its mind whether to give members access to their personal information in an interesting way. Right now, the conversation of plausibility, personalization, positivity and plain speaking is really a matter of semantics.
At best, Nest can use the “learnings” of its work with Invesco to produce better class goldfish food, but if it wants the goldfish to feed themselves, Nest is going to have to take goldfish out of the bowl and let them prosper in a proper pond!
The challenge is one of control and right now the controls on information at Nest are so tight that people simply aren’t interested in what Nest is telling them. People need access to real time information about the value of saving and they need a way to act on it, beyond the control of those who manage the information.
I am not comfortable being “cookied” and I don’t see why the content of Nest Insight and Invesco’s research should not be as relevant to me as an “i
nvestor” contributor as it is as a professional/institutional adviser.
That is my “freedom challenge” to Nest – let me out of that god-damned bowl!