Another route to managers improving engagement that should resonate strongly with Millennials is to promote greater ESG investment. Managers could highlight where savers’ contributions are making a positive impact on society or the economy, investments which typically require long-term holdings to realise their full value. A recent report from the Defined Contribution Investment Forum  highlighted how 80% of 22-34-year-olds said they were more interested in environmental issues than they were five years ago. This, however, would all have to be within the bounds of meeting fiduciary responsibilities so that they provide the best return for an acceptable amount of risk.
Sustainable and responsible investing appeals to Millennials, in particular, as they are typically very interested in making a contribution for good, so transparency around where their pension savings and money are invested (which can, for example, be used in funding activities such as major capital projects, improving the environment or mitigating against climate change, etc.) should resonate positively. Managers could learn from communication specialists such as Quietroom, who regularly provide concise, clear information on pensions issues and who recently produced a video entitled, “Pension money: where it’s invested and the good it does”, which I highly recommend watching.
Improving financial literacy and awareness should be of paramount importance to all pensions industry participants. Whilst I fundamentally believe this should be a core part of the curriculum in schools funded by Government, there must be opportunities for asset managers to work in tandem with schools or fund additional programmes which would help engage young people at an early age, so they know the importance of saving for their retirement. One such existing example is Redington’s RedSTART initiative, which has helped over 3000 children gain important skills to help them manage their financial futures. This would help prepare future generations to become active savers as soon as they enter the workforce.
Asset managers clearly have a huge amount to gain from investing in proactive initiatives that will support the pension industry’s efforts to improve engagement with savers, especially Millennials. Through a combination of investing in new technology, supporting financial education across all ages and being committed to improving transparency and delivering clear value for savers, asset managers can position themselves to play a major role in encouraging people to make increased contributions, which will improve their reputations which ultimately benefits their businesses in a highly competitive market.
 Navigating ESG – A Practical Guide – Defined Contribution Investment Forum, April 2018
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Why Technology Matters
About Tom Hibbard
As Head of Business Development for ClaritEx, Tom’s focus is on understanding the industry's ever-changing challenges, and bringing relevant stakeholders together to establish how new technologies can make a real difference to reporting in the pensions industry. Tom will use his knowledge of emerging technologies to create and deliver the governance solutions that Simplitium will provide for the pensions market.
Formerly a Business Development Manager at KAS BANK, he has extensive knowledge of the global pensions industry landscape. During his time at the bank, Tom was instrumental in building the strategy and brand for the UK branch, playing a key role in establishing its position in the market and growing revenue.
ClaritEx is the next generation pension cost data monitoring solution for the pensions industry. Powered by Simplitium, the service helps both DB and DC pension schemes access the information needed to make better investment decisions and meet increased governance obligations. In response to the ever-growing demand for greater transparency across UK financial services, ClaritEx provides comprehensive transparency of costs to the UK pensions industry.
Cost transparency is achieved through a combination of innovative technology with a detailed and expert understanding of the investment value chain. By collecting consistent and comparable cost data from both schemes and their underlying service providers, ClaritEx delivers full assurance of costs to market participants in an industry which has, until now, struggled to achieve transparency. For further information, please visit www.simplitium.com/claritex.