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Changing the negative perception on retirement

30 June 2015 Jonathan Faurie
Yegs Ramiah, Chief Executive of Brand at Sanlam

Yegs Ramiah, Chief Executive of Brand at Sanlam

One of the most important studies in behavioural sciences is the correlation between a message, and the message’s ability to influence the thoughts of a person. Negative messages may lead to negative thought patterns while positive messages may lead to positive thought patterns.

This is a frame of reference that is pertinent in the South African retirement industry. A recent retirement study has revealed that 84% of respondents dismissed a comfortable retirement as nothing more than a romantic fantasy. Sanlam says that a possible reason for this view is that the retirement industry has so frequently broadcasted the message that fund members won’t have enough money to retire on, that they many no longer try to save any money in addition to the contributions made by their companies.

FAnews caught up with Yegs Ramiah, Chief Executive of Brand at Sanlam, to gain more insight into her thoughts on the study and the ways in which companies can realign their messages to encourage saving. Her message is simple: stop using scare tactics as a selling tool.

Lessons learnt

“The industry will have to rise to this challenge and come up with innovative initiatives to turn this perception around,” says Ramiah. She adds that financial services firms must adopt unconventional approaches and implement these with a common purpose if they hope to secure the country’s retirement future.

One such approach might be to apply the lessons learnt by the world’s leading brands to the local retirement savings industry.

One of the most pertinent lessons is the transformation from long-term to now. Ramiah points out that leading brands use technology to empower consumers to make decisions and act on it instantaneously, as is the case with on call taxi company Uber. As a result, consumerism has overtaken saving.

“The industry must also move from complex to simple. Leading brands make difficult things easy to understand and navigate. The next logical move would be from product to lifestyle; leading brands use technology to build a community and support and to encourage measurement and competition around the usage of product,” says Ramiah.

She adds that society also needs a nudge in the right direction. Leading brands get consumers to do the right thing by framing choices so they have the desired outcome.

The final two lessons deal exclusively with human emotions. There should be a move from rational to emotional where leading brands use positive emotions rather than fear or rational reasoning to sell.

And there should be a move from individual to community. Currently, retirement is sold as an individual need; more and more consumers are showing preferences for communal lifestyles and retirement products need to cater for this.

Keeping it straight and simple

Ramiah is of the view that savings products currently don’t offer the simplicity and ease of use that technology enabled lifestyle solutions such as Uber and SnapScan, a payment app that deducts money straight from your bank account, do. Yet, this is the space that investment firms should occupy if they wish to assist people in suppressing their urge to spend in favour of saving.

“A Harvard Business Review reported a study among 7 000 consumers and found that the one thing that engages consumers in choosing a brand or product is simplicity in the decision-making process,” says Ramiah. “The future retirement product must therefore be easy to find, understand, evaluate and buy.”

The annual benefit statement is a case in point. Imagine if instead of a page littered with numbers, the statement provided an answer to one simple question: will your client have enough money to fund their preferred lifestyle in their later years?

Simplicity at the touch of a button suggests a move towards mobile product offerings. However, Ramiah feels that this is not a move to make advisers extinct.

“The role of advice will always be critical and individual. Technology can play a bigger role to enable the spontaneous contribution and collection of retirement funds as it suits individual clients and in the analysis of data,” says Ramiah.

The road to success

The changes that Ramiah is suggesting can be seen as radical, but also revolutionary. It all depends on your frame of reference. However, are these changes achievable?

How can the industry accomplish these changes? Ramiah believes that the lesson from leading brands is to create a movement consisting of individuals whose desires resonate with that of the brand. The retirement industry should identify a market segment that has the potential to influence the generations that precede and follow it.

“The best group for the retirement industry to focus on is the Millennial Generation – persons born between 1982 and the early 2000s – who are known to be keen to save and have both the attitude and desire to change the world,” says Ramiah.

Editor’s Thoughts:
We can say what we want about changing the industry. But in order to create an utopian society, we need to move towards an industry where retirement products are bought and not sold. Who will be the Apple and the Samsung of the retirement industry? Do you feel that this is easily achievable? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts


Added by Kenny Williamson, 30 Jun 2015
The comment above is an interesting one. Why is it that compliance requirements are different for direct marketers as opposed to proper financial advisors?
Why does a client not have an option to increase savings, without procedure? After all, they can open a bank account online and save in that method. I also think that this has become way too regulated... surely there could be a client chooses without advice and takes responsibility kind of addendum.
If savings are so low, surely getting rid of red tape to allow for the immediate client selection of retirement funds would raise savings rates? regulation could be an oversight at a higher level of what funds are clients investing in and see that that is all prudent... if necessary then boots could be put on the ground. Would also help lower the costs in the industry and get rid of some of the manpower involved in regulation.
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Added by MEC, 30 Jun 2015
I am one of the people who wants to do things online. But if i want to increase my retirement contributions I either get a phone call with hundreds of questions, or a 2 page form to sign, with an advice fee to pay. Please, can we just simplify everything and just go click click, amount increased?
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