Millennials are not engaging with superannuation but there are approaches funds can take to bring them into the super tent, according to Sally Loane, CEO of the Financial Services Council.
Speaking at the FSC Leaders Summit in Sydney this week, Ms Loane said new research by Deloitte Access Economics into the needs and behaviours of 18-34 year olds – who in just eight years’ time will comprise two-thirds of the workforce- revealed approaches to engage millennials in super.
“Achieving better engagement will mean a cohort better able to self-fund their retirements. So – how do we get the unengaged, engaged?, ” Ms Loane said.
- Make it digital: Most super funds were set up when the internet was in its infancy. Those that have embraced digital get rewarded. The Commonwealth Bank’s Essential Super experienced a 37 per cent increase in members via its digital channel last year, of which almost 90 per cent were aged between 18 and 24.
- Make it fun: NRL star Beau Ryan’s “sex or finance” quiz for GROW Super on Facebook has notched up over 120,000 views.
- Make it meaningful: Increasingly people want to know how their investments are impacting the world. Goodments, a startup investment app that matches investors to ESG values found 56 per cent of customers surveyed would accept slightly lower or average financial returns in exchange for good sustainable performance.
- Make it simple: Some new digital funds are using the Acorns roll-up spare change model to allow members to effortlessly boost savings. Combined with compound interest, it’s a powerful prompt and affords instant gratification.
- Make it relatable: Millennials don’t compare their super fund experience with other super funds, their benchmark is their experience with Uber or Deliveroo.
Millennials are designing the super funds they want to use, f and because they will be the biggest customer base in the future superannuation market the industry needed to take note, Ms Loane said.
Before developing introducing new strategies to engage with millennials the industry must deal with some difficult realities:
- Millennials place a higher value on near-term goals like a house than in super
- There is a trust deficit with 57 per cent of young adults feel super fees are not transparent enough and only 23 per cent trust the industry.
- There is also lack of understanding and knowledge with CHOICE finding disengaged young people think super is a “problem too hard to solve.
How does disengagement manifest itself?
Multiple accounts –-more than 30 per cent of people under 29 have more than one super account; and 10 per cent have three or more.
Paperwork doesn’t get done – the ATO found that very few young people recalled completing their super form when they started a job, partly because they were “not interested in completing the paperwork.”
The economic ramifications of chronic disengagement are dire. Disengagement will result in the generation which will grown up with super for its whole working life won’t have enough for retirement and the burden will fall on the age pension, Ms Loane said.
“In other words, the more we allow, and indeed condone apathy and disengagement, the worse off young people will be at the end of their working life, and so will we, the taxpayer. ”