Confronting individuals with their likely annual income in retirement is set to become a common tactic for Australian superannuation funds trying to forge better engagement strategies, according to JPMorgan Asset Management.
Providing individuals with tangible income projections and incorporating them into a series of tailored, proactive, data-driven communications helped capture the attention of United States pension plan members, JPMorgan Retirement Plan Services managing director Donn Hess said.
"We're starting to have a better idea of what works to reach and motivate people, and advances in technology and data analytics are set to empower these programs to achieve real change in the retirement prospects for many Americans," Mr Hess told delegates at the 2012 Association of Superannuation Funds of Australia (ASFA) National Conference in Sydney.
His comments came in light of Australian superannuation funds' struggle with poor member perception.
According to recent Roy Morgan research, only 42 per cent of members in retail super funds were satisfied with the financial performance of their fund, compared to 49 per cent for industry funds, and 64 per cent for self-managed super funds (SMSFs).
"Triggering member action on retirement savings adequacy and tailoring the message to different investor circumstances is a universal challenge for institutional investors worldwide," Mr Hess said.
"Despite the different retirement systems, we see common challenges across United States and Australian funds."
In the United States, JPMorgan ran its member communication and education philosophy, Audience of One, which was based on the principles of: make it personal, make it simple, connect the money to the emotion, diagnose before you prescribe and cultivate an ongoing relationship.
United States pension plan participants who were exposed to Audience of One during 2005 to 2012 showed a 31 per cent increase in their overall income replacement levels; the number of participants on track to achieve at least 70 per cent of their retirement income increased by 104 per cent.
The rapid evolution of data customisation means super funds can use individual member data to build tailored messages based specifically on each member's fund profile, including the account age, income and level of engagement, Mr Hess said.
