The Impact of Digital Tools on Occupational Pensions.
Although corporate, or occupational, pension coverage has been present in the Western world for several decades, few employees fully understand the value it provides. A recent Harvard Business Review article states that 41.4% of US employees cashed out their corporate savings when changing jobs. 85% of them drained the entire balance. The median retirement planning savings for a US-based 54-65-year-old is far from enough to sustain a middle-class lifestyle at retirement. Although the requirements for quality corporate employee care toughen, it is not only the firms’ responsibility to provide employees with the right tools to plan and manage their golden years. The financial industry should take a step to help their clients’ workforce understand and manage their financial futures.
In recent years, the pension industry has faced a dramatic increase in uncertainty, pushing for greater efficiency and enhanced client satisfaction. By the end of 2022, combined assets of the world’s top 300 pension funds decreased by 12.9%, now totalling US$ 20.6 trillion compared to US$ 23.6 trillion at the end of 2021. Jessica Gao, director at the Thinking Ahead Institute, reflects on the insights from the Global Top 300 Pensions Funds report: “… In last year’s research, we anticipated rising inflation and interest rate pressures, as well as the potential for slowing growth the following year. With the latest data, we have witnessed a drop in pension assets, with a fragile global economy seeing equity and bond markets reverse previous gains.” Combining intelligent technological solutions and addressing the underserved customer segments is a natural strategy as the landscape shifts.
Elevating Hybrid Retirement Planning Experiences: The First Touchpoint
The debate on the future of physical or digital financial advice ended with a hybrid approach taking centre stage. In our experience, digital-only solutions within retirement planning sometimes suffer from being too complex. Specifically, if one tries to implement a complete pension advice journey considering all the bits and pieces making up the total pension picture of a customer. Hence, combining advisor-led and digital channels can help insurers achieve the best of both worlds – creating lean, automated experiences while still preserving the human touch in a journey managing the full complexity of pensions.
The first touch point between the life insurer and the employee often happens digitally – typically when the email is sent and the meeting is booked. Modern technology can take this experience further in order to prepare the employee for the meeting with their pension advisor, significantly saving advisor time, reducing churn and, importantly, helping employees increase their confidence and understanding in their retirement planning situation. Unified financial analytics powering these digital journeys enable financial institutions to deliver a superior service to corporate employees while significantly reducing costs.
Engage and Educate: Increasing Average Conversion with Digital Onboarding
Web-based “just-in-time financial education” tools for employees are among the suggestions in the Harvard Business Review article. Equipping financial institutions’ offerings with these tools can significantly improve the employment experience for clients, enabling employees to take control over their financial situations at retirement.
These digital onboarding experiences can be more engaging if they are personalised. The market-leading experiences we have built enables users to re-create their financial situations and simulate various savings outcomes depending on, for example, the investment size, retirement age and salary size. Pre-sales experiences such as these can increase employee confidence in their retirement planning and readiness to make financial decisions during the meetings with financial advisors, increasing conversion and, hence, assets under management.
Best practice onboarding experiences for employees do not focus only on engagement and marketing. They serve as an essential role in pre-meeting fact-finding and data collection. Rather than spending a significant part of a meeting gathering information about the employee – the digital onboarding experience may empower your team to collect at least some or even most of the required data beforehand – making advisor’s sessions much more productive and, potentially, much shorter. You can also boost the efficiency of the fact finding process by enriching your information via automated customer data aggregation services.
Conducting More Meetings by Ramping Up Self-service
An intelligent hybrid approach also presents various efficiency gains outside the fact finding and engagement domains. For example, you may provide digital follow-ups and monitoring reports between physical advisor meetings. Using a solution such as KidbrookeONE you can continuously evaluate employees’ financial situations, as well as their retirement planning situation, and send them proactive notifications and actionable alerts whenever needed. You can also use it to reduce the time your advisors spend on administrative tasks and operations.
Reducing Churn with Enhanced Client Engagement
The corporate pensions space has long been overlooked with respect to employee engagement because it is usually the employer who is a client of a financial institution rather than an employee. However, with the requirement for corporate social responsibility increasing, corporates are more incentivised to secure better options and improved retirement planning experiences for their customers. A clever combination of digital and physical service channels can help your institution to build a relationship both with an employee and an employer – providing the former with quality self-service tools and proactive notifications to manage their financial situation over time and the latter with a reasonably priced market-leading corporate pension experience. That way, the financial analytics technology can elevate the experience, improve client engagement, and reduce churn. It is simply harder for management to switch providers if a majority of employees are happy with the benefit and service they receive.
Improved Onboarding for Corporate Pensions: Estimated Impact
Corporate retirement planning is a favourable environment for empowering employees to take charge of their financial futures. Unified financial analytics can support financial institutions in creating reliable and engaging hybrid pension experiences that onboard, educate, monitor and update employees on the intricacies of their financial position at retirement. At this point, financial advisors can answer employees’ questions on how they can best reach their financial goals and meet lifestyle expectations for their golden years.
KidbrookeONE can make this retirement planning process lean, efficient and more straightforward by empowering digital and physical channels with market-leading financial analytics and data management solutions.
For a pre-meeting engagement solution, the potential business impact is easy to calculate. For example, if 10% of employees enter the advisor meetings more engaged and confident and thus convert an additional 10% in private premiums on top of their corporate benefit, assets under management/advice will increase 2%. Or, if meetings on average take 10% less time thanks to employees being more aware of their situation coming into the meetings, and meetings taking up say 50% of advisers’ time, that’s a 5% reduction in cost for advice.
Reach out to our team to learn more!
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