Moroku makes the WealthTech 100 for 2019
For many fund managers, having customers set and forget is a sound strategy particularly when, like in Australia, contribution is compulsory. If customers see their portfolio they’ll just start asking questions and costing the fund manager money. Yet there is a danger here. Most people end up with multiple funds. They take the default when they join a company because they don’t have any loyalty and don’t bother consolidating. The reality is that they don’t set and forget, they just forget.
This is a problem for baby boomers particularly as the default program wont get them where they need to be. Remember, at first the Australian super ratio was zero and then 2%. 9% is a recent amount and is a world leading mandatory contribution. This creates an opportunity to help customers consolidate, contribute more and get on their game.
The most innovative tech companies providing solutions for the global wealth and asset management industries in 2019 have been announced on this year’s WealthTech100 list (www.WealthTech100.com). This list identifies 100 of the companies that every leader in the wealth and asset management industries needs to know about.. The companies on the list were selected by a panel of analysts and industry experts who reviewed a study of over 1,000 WealthTech companies undertaken by FinTech Global.
After making the EY Wamtech finals in 2017, why did Moroku again make the cut? ” We’re betting on the providers who want their customers to engage, build loyalty and win.
Almost 40% of workers with a retirement plan 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; and 33% are not familiar with their retirement plan’s investment options. Things in Europe and Australia are about the same.
Research from the MIT AgeLab suggests gamification can make a significant difference in how a client responds to the type of retirement planning advice the industry offers. Too often, people don’t plan for retirement because it seems too boring, complex and scary. Financial wellness takes into account choices and consequences. However, many people can’t visualize their future well enough to understand the interplay of these concepts. That’s where gamification and goals-based experiences can help.
People like to see how their choices impact their retirement goals, based on a number of inputs and assumptions. They like to see the positive impact of a higher savings rate. They get rewarded and encouraged for making progress. They can see how they are doing comparatively.People want to win and they like seeing themselves win.
Gamification 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.
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, giving them more control and by so doing, diminish fear and indecision. Gamification is a great way to deliver a fun, interactive client experience that facilitates a more dynamic conversation and a deeper discovery process, which should result in better retirement outcomes.
This opportunity is particularly relevant for the target segment – 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 plan sponsors 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 two 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 occur for success to result.
2/ Make it fun. Its really boring and hard and that’s why people don’t do it. If clients are going to pay attention and start doing things they’d rather not we better make it fun and rewarding or they will revert to form.
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 may be 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