It is widely recognised that one of the biggest challenges in long-term savings is getting customers really engaged with their savings.
The FCA green-lighted many highly innovative approaches in their feedback Statement FS 16/10 Smarter Consumer Communications back in October 2016, yet too many pension providers insist on sending complex paper documents to consumers which frankly I’ve known actuaries struggle to understand.
Yes, work is being done on simpler paper documents but in the world increasingly dominated by new media and especially video, it is time to transform how we deliver information on an individual’s savings. The good news is a small number of key industry players have been putting this into practice.
For some time Mercer have been offering video statements as an option that employers can select for their staff and they have recently been joined by Legal & General with a similar service, with Aegon also launching personalised videos to its pension customers.
A number of things really impressed me about the way these videos work. Firstly, unlike other similar services I’ve seen they actually talk the numbers out to the individual. Some systems simply say you will, for example, “have contributed” an amount expecting the user to be watching the screen to see the number appearing.
The latter approach requires the user actually to be watching the video, that is to say actively paying attention. The problem here is if the user is distracted they are not really going to be absorbing the message. Conversely, if a number is actually read out to the user, hearing that number is likely to resonate far more. Indeed if an individual is not really paying attention but they hear a large number that is actually the level of savings they have achieved this must be more likely to grab their attention.
I am also impressed by the way both examples actually talk to the consumer about the likely level of income they will receive in retirement and then give them examples of the impact of making further contributions. I have seen similar services that only refer users to a projection calculator to work out the impact of further contributions. If an organisation is going to go to the trouble of building video statements you really need to do all you can to drive better engagement.
There is significant evidence that video statements can drive up user adoption across a wide range of financial services product. Analysis produced by BlueRush, a Canadian specialist software house who have a range of tools in this area, demonstrates really impressive results.
AFP Habitat, a Chilean pension provider, delivered over 2 million such video pension statements to customers quarterly. This has resulted in a 180 per cent increase in the number of people clicking through to a video statement when compared to a PDF. AFP Habitat found 70 per cent of viewers watched the entire video and 65 per cent of customers opened either a voluntary account or increased their existing contributions after watching the video statement.
Equally, when deployed in the insurance market, US insurer Allstate Insurance achieved a 96 per cent email open rate with a 10 per cent increase in conversions through use of video. This suggests to me that video statements could also be a really powerful way of highlighting the benefits of group risk insurance cover to members, an area where, in my experience current communication methods are very dated. The Allstate experience demonstrates a huge opportunity for the group risk market. It identifies how we can give scheme members a far better understanding of the benefits they have and particularly call out issues like the importance of undergoing full underwriting for cases that exceed the free cover limits.
We live in an age where video dominates, search engines are explicitly calibrated to prioritise video content and virtually every consumer carries a device, their mobile phone, everywhere, capable of delivering this content. I believe Mercer and Legal & General have both done a great job of demonstrating the art of the possible. More advisers and insurers should follow their lead.