“I got my Nan a Monzo”
Admittedly, this is not the type of title you often associate with an article about pensions! It is, however, an important demonstration of how young people want to engage with their money. More on that later…
On 24th June 2019, Ethical Compass ran a focus group with a small number of pension savers, the majority of whom were in the age bracket of millennials. The object of the session was to understand the views of the participants on 4 main topics:
Pension awareness - What they knew of their pension and where it was invested
Impact investment - What they knew of impact investment
Member engagement - How they engaged and communicated with their pension (provider)
Influence - where would they seek information about pensions and who would they trust?
Let’s deal with the elephant in the room: no one really knew what their pension was, and only 25% knew where and how it was invested. It was clear that the knowledge level was very low. Most of the participants told us the only support, guidance, and advice about savings and pensions had been given to them by their parents.
There clearly isn’t a culture of pensions in the UK and, let’s face it, the topic is often met with eye-rolls and derision. It’s traditionally been a boring and dry area of the financial industry.
We also found out that the knowledge of impact investment was low, with 75% being far from the mark about the definition of impact. When the participants were told about impact investment, they were positive about the role it could play within their pension investments. 50% highlighted education as an area where they would like to see their money making an intentional, positive difference. In a phrase that signalled caution and has no doubt been repeated by pensions trustees up and down the country, one participant wanted to be sure that the financial returns could be “proved” before he would commit his money.
What we did find, however, was that people really wanted to know more about their pension and deeply cared about how and where their money was invested. They said that “trust comes through transparency”, a phrase especially pertinent given an industry that has traditionally been criticised for its opaqueness.
Interestingly, 100% of participants drew the line at investing in tobacco and weaponry - these were no-go areas for them. There was a unanimous request for more information about the environmental and social impact of their pension investments and they also wanted to be engaged on moral and ethical matters when making investment decisions. BUT… they wanted to be consulted “in 35 words, not 3 pages.”
And so we come back to the Monzo-carrying Nan… When discussing the communication between the pension scheme and the member, all of the participants said that the engagement was poor. One participant said they received “a letter now and then” and another spoke of “so much writing” with information displayed in an “unaccessible” way.
The overwhelming ask from all of the group was to make communication simple, succinct, and engaging. Instead of a letter, they said that fitting it on an iPhone screen was preferable. Monzo was highlighted as a leader in this aspect - their user-friendly and intuitive app design was so simple even one of the participant’s Nan was using it.
The final point was on the topic of influence. Where would the participants seek, and be open to receiving, information about their pension money and impact investment?
The answer from the millennials in the room was unequivocal. Social media was “100% the biggest influence” and from where they got the most useful and engaging information. What was very clear was that no one had ever seen any content on finance, investment, or pensions on their social media feeds. To the mobile-savvy, social media surfing millennial or Gen Z savers, this represents a massive opportunity to communicate and engage.
So, what were the key takeaways from the participants in the focus group?
First, they were interested in their money and want to engage with it more.
Second, they want their money to help make the world a better place, funding things like education, research, and climate solutions, as well as providing excellent financial returns to fund their retirement.
Third, they want to communicate and engage more with the decisions and content of their pension investments, but only if it simple, (mobile) accessible, and user-friendly.
Plenty for pension funds to consider, discuss, and action. If you are interested in further information from this focus group or would like to have a conversation about how Ethical Compass can help you use impact to engage your trustees, Fund Managers, and members, please contact us at firstname.lastname@example.org or visit our website: www.ethicalcompassmgmt.com.