Playing games with pensions: Can gamification help boost retirement saving?

171116_gamificationaw

The words “simple” and “fun” are not usually used in relation to pensions. But with technology increasingly playing a part in raising awareness of long-term savings, things are changing.

Gamification – where the features of digital gaming are applied to other walks of life – can be used to help people get to grips with pensions and motivate them to save more. And for people who have little interest in games, there are various apps and other tools where the content is perhaps more serious.

So are digital approaches to education and engagement with retirement savings effective? What are the benefits for advisers? And what developments are potentially around the corner?

Learning through play

It is well known that children learn through play, so why not apply the concept to teach adults about retirement savings, given traditional approaches have largely failed?

Director in EY’s UK life and pensions practice Dan Mahony says: “The industry has traditionally been quite poor at presenting information in ways that are easy for consumers to understand and engage with. Often this has been due to compliance department concerns of over-simplifying complex financial information. The impact has been to inadvertently stifle innovation, and create jargon and impenetrable consumer-facing literature. But we are seeing change coming through.

“We have seen that adding simple gamification elements to an online insurance application or digital fact-finding process can decrease customer abandonment rates by up to 50 per cent.”

Retail group Kingfisher provides its auto-enrolled employees with access to a gaming app called Bolt to the Finish. Created by financial services communications firm Teamspirit, it aims to encourage employees to save more by breaking down perceptions that pensions are boring.

Adding simple gamification elements to an online insurance application or digital fact-finding process can decrease customer abandonment rates by up to 50 per cent

Teamspirit managing director Kirsty Maxey says: “The game encourages people to interact with saving. It tells them the sooner they start, the easier it is to save. It was aimed at the younger age group and the characters are based on age profiles. The older characters find it harder to save and the content gets more serious the older you get.

“You need to tailor content, and you need to give people a bit of information and a reward so they are more likely to come back and engage.”

The app has received criticism for trivialising a serious issue but Maxey points out there has been a year-on-year increase in the number of Kingfisher employees saving and increasing their pension contributions since it was launched four years ago.

“Our answer to the criticism is that the industry can keep doing what it has always done but we will keep getting no engagement,” she says.

Consultancy Alpha FMC head of digital Kimberly Yurisich is another advocate of gaming techniques. “As opposed to reading an article or watching an expert explain a concept such as risk and inflation on TV, which could feel passive or even dull, game-based learning engages and motivates participants,” she says.

The market is clearly beginning to pick up on the benefits of gamification, with more and more organisations looking towards some form of digital offering. However, Capgemini Consulting principal for wealth, long-term savings and insurance Rod Bryson warns that, while there is certainly nothing wrong with having fun to get people to think, providers have to make it relevant. “It can’t be a game for game’s sake,” he says.

Relevance to advisers

So what does this all mean for advisers? According to Finance & Technology Research Centre director Ian McKenna, advisers will be using a much wider range of data to help clients make decisions around their retirement going forwards, with such digital advancements playing a key role.

He points to both Intelliflo and True Potential, which offer a feed from US technology supplier Envestnet Yodlee to generate a detailed level of client information pulled from credit card and bank accounts. That data is categorised and can be presented via the adviser to clients through their smartphones.

“Getting data this way really enforces the adviser brand in the eyes of the client. It gives them a more insightful view of their spending than they get at the bank. Without being in control of your income, expenditure and debt you can’t make any regular savings,” says McKenna.

Taking action

Commentators agree that simply making games and other tools available does not necessarily mean people will start putting what they learn into practice.

For Strabens Hall executive director Adam Benskin, the key challenge is ensuring any new offering does not just become another defunct app or programme in an already overcrowded space.

He says: “Extra tools can be viewed as a hassle; adding to an already over-complicated process, instead of being something to facilitate learning and personal financial management.”

Online advice firm Wealth Wizards director of innovation Tony Vail agrees.

“Some of the tools are created with the best intentions but can just end up complicating things. You have to take into account what people are used to,” he says.

“Some tools I’ve seen have dynamic graphs with lots of lines, which is great if you are graphically literature. But not everyone is and they can confuse as much as they illuminate.”

Now and the future

A quick glance at how digital technology is already being used to educate and engage people in saving throws up all sorts of risk profiling tools and budgeting apps.

Many commentators see apps like Moneybox as a fresh approach. Moneybox rounds up the amount people spend on their card purchases to the nearest pound and invests that difference in a choice of three risk-graded portfolios made up of three tracker funds. But what does the future hold?

For Vail, the next big thing is likely to be Chatbots: a chat interface that works in the same way as texting or Twitter.

As opposed to reading an article or watching an expert explain a concept such as risk and inflation on TV, which could feel passive or even dull, game-based learning engages and motivates

He believes there is a lot of potential for voice recognition technology to be used in the pensions world. People are already getting used to things such as the iPhone’s Siri or Amazon Echo, a voice-controlled “smart speaker” that works through the Alexa Voice Service.

For Barnett Waddingham associate, workplace health and wealth, Julia Turney, focusing on engaging younger people in the 18-30 age bracket now is the key to making retirement saving a habit for future generations.

She says: “They need to know they will need money for a house or a car, and have enough in their pot for later life. We might be able to build the technology now but can we change perceptions to make it commonplace to save for retirement?”

But for all of the pros around digital technology and engagement, Bryson is concerned about what happens at the next step.

“It is both a big opportunity and a challenge. Even when people are informed and engaged with saving, how innovative are investment solutions and how easy are they to understand? The challenge is whether the products themselves are equally straightforward, and whether people can see the benefits.”