Repair the disconnect through communication

The Sanlam Benchmark Survey has highlighted the fact that the typical South African employee does not engage with their retirement funding journey until it is too late to make a material difference to the quality of their lives in retirement. There are a number of reasons why this is the case, and the industry is attempting to address these in constructive and practical manners.

A critical issue that acts as an obstacle to individuals taking ownership of their respective retirement funding journeys is the disconnect between these individuals and the rest of the retirement funding value chain.

Financial jargon hurdle

The disconnect is, in part, driven by the use of financial jargon by providers when attempting to communicate, influence and educate employees. The use of such jargon, especially in a sensitive context where people intrinsically experience an information asymmetry, acts to disassociate the individual from taking ownership of their retirement funding as they tend to default to a position of powerlessness and abdication.

In medicine, the ability to engage patients and communicate effectively to them is known as bedside manner and, in general, the bedside manner of the retirement funding industry has been historically poor.

Valiant efforts

Over the past five years, there has been a significant effort on the behalf of consultants and funds to develop the capability to provide contextual communication in a manner that they can actually engage with given the challenges of a diversified workforce in South Africa.

This diversity should not be underestimated as we not only have diversity in education levels, that affect the balance between the simplicity and thoroughness of the message provided, but also in mother tongue, which affects the degree to which an individual is able to comprehend the message provided.

Capabilities are now available to cut through this complexity to ensure that the intended message is delivered, whether by using comic strips, videos or Facebook pages. The drive towards plain and simple language is a step in the right direction, but implementation has been slow thus far.

Diversify test subjects

Another reason for this disconnect is that financial professionals are typically the ones wholly responsible for the drafting of communication without testing the suitability of our output with a non-financial audience before going into actual production. Doing so is likely to result in an increased cost, time and effort applied to the communications process, hence the reluctance of funds and providers to go this route, but one needs to reflect on whether the actual return on such investment is viable to embark on such a route.

The principle at stake here is whether the end justifies the means and, currently, the poor levels of comprehension amongst retirement fund members align very closely with the poor retirement outcomes being experienced.

Review platforms

The platforms being used to engage employees on retirement also need to be reviewed as an annual benefit statement, even if it is actually read and fully understood, does not provide the necessary frequency of contact to empower people to engage with their retirement funding.

Out of sight is out of mind, and communicating in this ineffective manner adds to the challenge of funding appropriately. Frequency, relevance and simplicity of communication will act to get South Africans engaged in this lifetime journey of wealth creation.

Advisers have a key role to play as, while the industry works to improve how and where it communicates, they are able to engage individuals on their journeys to help them to understand their current situation, likely future scenarios and how to improve their retirement outcomes in the context of their fund in a manner that they can actually understand. Advisers have the financial nous and customer-centric capability to cut through the jargon and redefine retirement in language that people can actually understand.