3 minute read
How empowering member engagement improves financial outcomes
BY NASHALIN PORTRAG Head: FundsAtWork, Momentum Corporate
Member engagement should be instrumental in empowering retirement fund members and creating better financial outcomes. However, bombarding members with masses of complex information simply adds to member confusion and apathy.
Retirement funds and their service providers need innovative communication platforms that help members understand and engage with their benefits. Financial advisers are instrumental in encouraging members to use these platforms. Members who connect with their benefits become more financially empowered and are more likely to engage with a financial adviser. This leads to better-informed choices and improved financial outcomes.
Effective engagement with employees on their benefits also unlocks significant benefits for employers. Greater engagement around benefits leads to improved understanding and heightened appreciation. Employees feel protected and cared for, which neutralises distracting worries, boosts productivity and results in stronger, more loyal employer relationships.
Effective engagement involves:
• Communication that is free of jargon and complexity
• Easy access to up-to-date and relevant information when it’s needed
• Communication that educates and empowers while it informs
• Access through the member’s preferred medium or platform.
The acid test is how the engagement makes a member feel. Do they feel relaxed, empowered and better informed to make a decision that works for them; or confused, frustrated and bewildered as they drown in information overload and industry-speak?
A case study in effective benefit communication
The benefit statement is one of the most important ways retirement funds communicate with members. Research by Momentum Corporate in 2018 showed that, in general, members have a basic level of financial literacy and there is a high level of discomfort around industry terminology,
regardless of age or income. The result was that members often did not understand the information on their static benefit statement, which left them feeling anxious and disconnected. Drawing on this research and considering the digital preferences of younger generations, Momentum Corporate set about creating a new kind of member benefit statement. Their new smart benefit statement gives members real-time information on their retirement and group benefits through any digital device – mobile phone, computer or tablet.
A significant number of FundsAtWork Umbrella funds members received a smart benefit statement in 2020 and read it, giving it a very favourable client experience rating of 4.64 out of 5 stars. Further research conducted by Momentum Corporate in March 2021 found that 75% of participants found the language in the smart benefit statement far simpler and easier to understand than previous terminology.
Engaging with younger, less financially literate members
The research showed that older members have a better understanding of their benefits and industry terminology than younger members. This is largely due to more years of exposure to their benefits. However, the research showed that the smart benefit statement was exceptionally well received by younger members who are further from retirement and often more passive when it comes to benefit engagement.
The research also showed that higherincome earners tend to be more financially literate while lower-income earners are less financially literate. The smart benefit statement, which offers access to relevant educational material and enables younger, lower-income earners to demystify complex terminology or concepts with the tap of a finger, is particularly effective in empowering these members to engage with their benefits.
It’s particularly important to encourage younger, lower-income earners to engage with their benefits as this will increase their understanding and financial literacy. As they become empowered to know when to turn to financial advisers and what to ask, they are likely to make better-informed decisions, which ultimately will produce better financial outcomes.
