Playing the Game of Life
Almost 40% of workers in the United States are woefully unprepared for retirement, with less than $25,000 in total savings and investments. That’s not a huge surprise when you consider that
- 21% of workers with an employer-sponsored retirement plan are not contributing to their plan
- 44% are saving less than 10% of their income
- 33% are not familiar with their retirement plan’s investment options.
Things in Europe and Australia are about as dire
Research from the MIT AgeLab suggests making wealth planning fun can make a significant difference in how people respond to retirement planning. Too often, people don’t plan for retirement because it comes across as boring, complex and scary and can’t visualize their future well enough to understand the interplay of numerous concepts. That’s where using game as a design architecture can help.
People want to see how their choices impact their retirement goals. They like to see the positive impact of a higher savings rate. They want to see their relative performance. They want to win, and improve their chances of success. It really is the game of life, so lets harness that paradigm. Making wealth management fun, architecting the user experience as a game, appeals to a broad range of personality types by providing clearly defined rules and rewards, engaging friends and family members and the clear visualisation of progress. As you will read routinely within this website, the reason this works is because we are wired for fun.
There is a real opportunity to shift the amount of attention and effort people put into financial planning by engaging customers in their own retirement planning process, through fun, giving them more control and ownership and by so doing, diminish fear and indecision. By augmenting or even replacing “Ease of Use” with “Fun to Use” it is possible to deliver a fun, interactive client experience that facilitates a more dynamic conversation, a deeper discovery process and better retirement outcomes.
This opportunity is particularly relevant for Gen Y. Although Gen Y is often referred to as the “technology generation,” a more appropriate moniker would be the “connected” generation. Throughout their lives they have played online games to connect, compete and compare themselves with friends (both real and virtual). And there’s growing evidence that superannuation and wealth managemnet firms can leverage this mindset to design online gamified wealth management experiences that engage Gen Y around financial planning and well-being.
Moroku recommend that wealth providers base any engagement on three key principles:
1/ It’s a journey – We’re not going to turn this around overnight but future customer capture is dependent on it. Take the time to map the journey from start to finish and think about all the things that need to drop for success to result.
2/ Make it fun. Planning to retire is really boring and people don’t want to think about it.
Definitions of retire include “to withdraw from action” and “conclude one’s working or professional career” These ideas exude old age and defeat. If we are going to get people, particularly young people with no desire to “withdraw from action” to pay attention and start doing things they’d rather not we better make it fun and rewarding or they will revert to form, i.e. things that are fun.
Play is essential to life as it is fundamental to how we build social, problem solving and indeed many life skills. When we look at the animal kingdom we find that play is used by every species to build crucial life skills right across the age specturm and to engae others. We find that we are designed by nature to flourish through play. Research shows us that play is not just joyful and energising, it’s deeply involved with human intelligence, progress, exploration of the possible and skill building. Accordingly there is a strong correlation between success and playful activity. This has massive implications for wealth management – If we can make Wealth playful we can drive success.
3/ Digital .When it comes to the how, it’s got to be digital. The business of planning is expensive and resource constrained. Sitting down with everyone is impossible and only really pays off for the wealthy, which interestingly are those that need that advice less. In Australia, advisors have to date only been able to engage in man to man marking with those that have more than $250K to invest which is only 10 – 15% of the population.
Let’s have a look at the numbers. A planner has about 220 days a year to get some work done. Seeing a customer every day isn’t regarded as feasible as there’s too much to be done. If each customer brings in $250K in Funds Under Management (FUM) that should generate about $2.5K in fees, meaning they need 140 customers each which is regarded as a good work load for man to man marking
|Total FTE Costs||$350,000|
|Fees||1% = $2.5K|
|Required # Customers||140|
These numbers are well known and have lead to all those customers who have more than 250K being wrapped up in a wealth advisor relationship. If there is to be any growth in the segment we have to find cheaper faster ways to serve those with less than $250K in FUM and get them saving. The only way to serve them is via mobile and online.
This is why investors are pouring hundreds of millions of dollars into startups that provide online financial guidance. Some of these companies offer portfolio-management tools in competition to traditional advisors and banks. Although they are startups and have yet to generate substantial revenue or profit, they are fetching lofty valuations as investors view them more like Internet companies than as conventional financial-services firms. Redwood City, Calif.-based Personal Capital, for example, has no branch offices but offers access to human advisers in addition to online account-tracking tools and automated investing. 30% of the more than $1 billion in assets it manages are in accounts of $1 million to $10 million. Other firms, including Betterment and Wealthfront, charge lower fees—or for some small accounts, zero fees—and cut out human advisers almost entirely. Wealthfront focuses on younger investors, with half of its customers under the age of 35.
Current superannuation, 401K and wealth management providers must move to mobile with fun, guided experiences because its the only way to grow and if they don’t the Betterments of the world will begin to eat their lunch.
There are two great quotes in a good article in Forbes for those that are tasked with building next generation wealth management solutions:
- Jason Gurandiano, head of financial technology investment banking at Deutsche Bank AG , “You have a shift from baby boomers to a tech-savvy generation that’s inheriting the wealth and doesn’t have an appetite to deal with a traditional broker at the golf club,” he said. But he added that his 20 years in the industry have taught him that “behavior also takes longer to disrupt than you originally think.”
- Daniel R. Odio was CEO and co-founder of Socialize, Inc. The 39-year-old, who sold his social-media company two years ago, said he often uses Betterment’s iPhone app to add more money to his account. “It’s the gamification of investing. I love the feeling that I get when I use it,” he said.
The global financial services market is undergoing an enormous change brought about by technology that is changing the expectations of customers in terms of how they want, expect and are being served. Lead by Google, Apple, Facebook and mobile video game companies like Zynga and Farmville, customers expect everything to be available from their smartphones and those services to be always on and be fun.
A report commissioned by Saylent to assess consumer and small business banking preferences, highlighted some key opportunities for those with the foresight and courage to act:
• The large underbanked and millennial markets present a substantial opportunity for customer growth and revenues
• Millennials are three times as likely to report that mobile is their preferred channel
• Financial services companies that differentiate and package products for different audiences, include incentives and rewards for specific behaviors, as well as optimize for the mobile channel, will drive adoption, more effectively serve customer needs and bolster satisfaction and loyalty
While most of us appear to be relatively good at short-term money management, other behaviours are more troubling. These include the lack of active and long-term savings in formal financial products, excessive reliance on credit (including to make ends meet), difficulties in choosing adequate financial products and uninformed financial decision making.
Games bring structure to play. Games define outcomes, rules, behaviours and winning within which to play. Tennis, backgammon, cards and board games are all very examples of how play can be structured and still be fun, sometimes more fun. Games not only bring the fundamental element of play to the table but also introduce the rules, constraints and objectives that define winning and do so in a way that is incremental and evolving. Rather than study a text book or read a website, games give us incremental feedback on guidance as we build skills and are able to take on increasingly complex scenarios and do so at improved speed and accuracy. Sports are very good examples of this. We can introduce children to almost any of the classic sports games and as they get bigger, stronger and smarter, developing skills everyday they are able to compete at a higher and higher level. At Moroku we imagine that the possibilities for Financial Services of harnessing game elements are endless, purposeful and very sustainable.
The Moroku engagement methodology combines agile, human centred design and game design to think about customers as players, define what winning means, define the problem or opportunity and then begin solution design and validation.
As we look at the customer as a player, question the shape of the game, a host of possibilities arrive as to what the digital insuurance experince could be. From these we collaborate with our partners to build applications on top of the Moroku GameSystem cloud platform that manages much of the player interaction before handing off to the back end system of data exchange and transacting.
Moroku works with Financial Services Institutions to firstly define the problem. This documents the areas of the business that present opportunities for disruption based on the application of fun and social. This is carried out through a set of workshops that define the commercial aims of any engagement, the core KPIs, customers and channels in play and what problems or opportunity hypotheses may warrant further investigation. Moroku runs large portions of these as a cloud service based on our world leading gamification platform, GameSystem, enabling much of what we do to be implemented, maintained and tuned rapidly and economically.
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