Hannah Lewis on breaking bad communication habits and making the future visible to members
Want to make it better? Make it simple.
Pension freedoms mean more choice for DC customers. That’s not necessarily a good thing.
Choice is hard. It requires brain power. Choices that are in a very distant future are essentially boring to the human mind. We’re wired to deal with the now. How do we make pensions un-boring for members?
Firstly, you have to improve your comms - because you’re helping people make choices
Every choice you make depletes your brain power. This is as true of small choices as big ones - the brain doesn’t distinguish when using your mental reserves. (It’s one of the reasons why going to the supermarket is tiring).
There’s a brilliant piece of research on judges and parole which highlights this. Let’s imagine you’re up for parole. You’re likely to make parole first thing in the morning and do not want to be the slot just before lunch. When people are tired and hungry they roll with the default choice (and if you’re a judge weighing a complex case that’s going to be “no parole”).
The scary thing is the same judge, just after lunch, is more likely to let you out. Think of your choice-making ability, your willpower, as if you start the day with a full battery - as you make choices, this reserve drains down.
How does this apply to pension comms?
When you communicate badly with your members, you’re draining their brain power. Yes, I said BADLY. Not “less well than you might have” or “in a way that is sub-optimal”. Badly.
So what is bad behaviour when it comes to communication? Complexity. This quote from Charlie Mingus nails it:
“Making the simple complicated is commonplace; making the complicated simple, awesomely simple, that’s creativity.”
Simple isn’t just words
Not using jargon helps. So does design. One pension fund we know of was having terrible trouble with their members jamming up the helpline with calls. This was solved by sending the same letters out, but just using…
…BIG FAT BOLD CAPITAL LETTERS…to direct members to the online help portal.
It sounds obvious I’m sure, but we need to remember - when we send members huge packs of information, they are not going to sit down and read it cover-to-cover as if it was a gripping thriller. Most of them are going to keep it at arm’s length, much like you would an open can of cat-food on a hot summer’s day.
You need to make your communications scannable - make it easy to pick out the important points. If you have an action that you want a member to take, you must make it clear, bold, and easy to find. Do you want to direct them online? Tell them. Then make it easy for them to do.
The regulator as bogey-man
Compliance departments up and down the land use the FCA as a bogeyman to scare their own staff into writing the most dreadful prose imaginable.
Meanwhile, the regulator is focusing more on the intent behind communication - are you trying to help? Or is your gazillion pages of terms and conditions/pension pack just scaring them off from making a choice?
“You need to make your communications scannable”
In fairness, though, there are many nice compliance departments which are simply trying to patch up leaky communications which should be easier to understand. If they want to slap disclaimers all over your pension communication - it’s probably written badly.
Why do you need to do this now?
The advent of auto-enrolment, combined with the pension freedoms, means that regulators will have their watchful eyes on DC schemes and how they talk to members. In the past we’ve seen DC comms largely ignored as a sickly twin to big, fat, DB schemes. DC only got time and attention as a side-issue and DC comms have been a bolt-on business for many in the past. That’s changing now.
The challenge of talking to members is both a business requirement and has a moral dimension - how do you help members have a prosperous retirement?
Once a member is enrolled, ideally you want to make sure they are in the right investment for them, that they save as much as they can and that when they do retire, they make good choices.
There are lots of ways to communicate to members. Which of them work best? We’re still working that out.
Behavioural science has yielded many answers already, but we think that pension communication is a fascinating human problem, which is why which is why we’re always running research into how people make decisions.
Breaking Bad (Behaviour)
Here are a few communication tips from the world of behavioural comms. You might have heard of them before, but have you considered using them?
A picture paints 1000 wrinkles - make the future visible
One really simple way to get anyone thinking about retirement involves ageing your photo and making you look at it.
There are plenty of apps that do this for fun - what about offering that printed on every pension statement? The research shows that, at a glance, seeing yourself in all your wrinkled glory brings home that you and future. You are the same person.
It’s the act of holding up a mirror, but one that artificially ages you.
This mirror effect was found by behavioural scientists, and it is new insights like this we’re searching for. When trying to help others save for retirement, you need to make it easier for them think about the problem, and make it relevant to them in the here and now.
Information needs to be presented in a way which makes it real.
If you show members a total retirement pot, they will save differently than if you show them that value expressed as an annuity. Further, if you tell someone that their pension pot will give them an annual income of £20k, they will view this less favourably if you tell them this is £1666 a month, or £384 a week.
“Compliance departments up and down the land use the FCA as a bogeyman”
By breaking sums down into chunks of money that we are more used to dealing with, you make it easier to visualise spending it - you know what your monthly wage is, what your weekly shop costs you now, and how much your council tax and utility bills are. Do they match against your expectations for retirement?
Even if you’re guided by the outlines of the ABI/FCA/Pensions regulator to show it one way - can you show the better way alongside?
What next for comms?
Pension communications are evolving. What we all do, collectively in DC comms, is so important because we’re actually at the forefront of dealing with human beings and their incredible frailty in making decisions about the future.
If we can collectively crack the secret of how to persuade people to do the best they can for their future selves, it won’t just be a pensions problem we’re solving - it will have ripples across health and education, too. By making pensions un-boring, you’re leading the way for everyone.
Hannah Lewis is director of Behave London.