Edition: April/June 2019
Behaviour, conversations and relationships
Default regulations highlight their importance. Louis Theron, head of investments
|Theron . . . clear objectives|
As we are dealing with members, we need to remind ourselves that a one-size-fits-all approach is not possible and not something that the default regulations are trying to drive. Rather, they’re about putting into place strategies that are suitable for the average member of the fund. In turn, these represent the main characteristics and preferences of the fund’s membership.
They encapsulate the DNA of the fund - what it stands for and to which all intended behaviours should revert. The strategies should be regularly reviewed, monitored and adjusted to accommodate fundamental environmental shifts such as changes in regulations and the fund’s membership profile.Conversations
Regardless of specific conversations, they should be seen as the delivery and support of mechanisms built around the default strategies. These are as important as the actual solutions themselves.
Liberty research has found that pensioners’ needs and wants can broadly be grouped mainly into functional and emotional categories. The research also revealed an overarching need for communication and information. The specific communication-related needs of pensioners and those close to retirement are:
Communication around a default strategy alone will not achieve the desired outcomes, whereas a conversational approach can be expected more successfully to deliver this.Partnerships
If appropriately addressed, the default regulations can introduce a new partnership in the delivery of the default strategies i.e. the partnership between benefits counselling and advice. According to the default regulations, benefits counselling is “the disclosure and explanation, in a clear and understandable language, including risks, costs and charges, of available investment portfolio and annuity options”. Most importantly, it is limited to the provision of factual information around the default strategies.
The default regulations have created opportunities for product providers, consultants and advisers to deliver better outcomes for fund members. These enhanced toolkits will not succeed by themselves. They’re intentionally associated with setting targeted member behaviours, the strategic enablement offered by member conversations and shared ownership focus from partnerships.