Millennials, an increasing portion of today’s workforce, are set to shape the world of work for many years to come. Katherine Barker, Head of the Momentum FundsAtWork Umbrella Funds, says that retirement fund solutions need to be flexible enough to address the specific needs of this rapidly-evolving workplace demographic.
An analysis of FundsAtWork membership shows that millennials – the generation born between 1980 and 2000 – now constitute just over half of all members. Barker says, “With this proportion set to grow, it’s critical that retirement funds understand the psychographics of this generation and deliver service experiences and engagement that creates value in the eyes of the millennial.”
A key challenge is low levels of financial literacy. The latest Momentum/Unisa Consumer Financial Vulnerability Index (CFVI) shows that a lack of financial literacy is the main reason consumers are financially vulnerable. According to the CFVI results, 18 to 39-year olds (millennials) are the most financially vulnerable age group.
This is bad news for employers, as Momentum’s Effective Employee Index research confirms a very definite link between an individual’s financial wellness (which requires financial literacy), their physical health and their ability to function optimally when they’re at work.
Basic financial education, such as differentiating between needs and wants and financial planning, is vital for reducing millennials’ financial vulnerability. Barker believes retirement funds can play a major role in this, which is why FundsAtWork members have access to Momentum’s Motheo Financial Dialogues, an award-winning financial literacy programme.
Barker says, “Millennials place a high premium on their health and wellness. But this is also the generation that is more focused on immediate gratification with less focus on the future. Retirement funds that offer members a programme that rewards healthy lifestyles create a platform for meaningful engagement and value creation in the here and now. Millennials with a predisposition towards healthier choices can derive greater value from their membership and appreciate their employee benefits more.”
“Technologically-wired millennials embrace technology in every sphere of their lives. Why should their retirement fund be any different?” says Barker. “Retirement funds need to re-imagine and re-invent every member touchpoint and service experience by leveraging the power of the digital technology platforms millennials use daily. This can transform tedious, time-consuming processes into the efficient, highly personalised customer experiences millennials expect.”
Barker says that this is why FundsAtWork members have access to ‘smart’ digital services across a range of touchpoints, from medical underwriting to when they resign from their current employer. “The ‘smart exits’ service which facilitates more informed decision-making at time of resignation is particularly important for highly-mobile millennials, as it increases the probability of preservation.”
An analysis of the FundsAtWork millennial membership shows 86% have been with their current employer for less than five years, while a 2017 survey of millennials by Deloitte shows 73% of South African millennials expect to stay with their current employer for less than 5 years.
Barker concludes “Retirement solutions need to resonate with the millennial generation. This includes leveraging technology, empowering decision-making through smart digital services and financial literacy programmes, and delivering tangible value, in the here and now.”