Anyone working in the superannuation sector knows the challenge of inspiring interest in a relatively (and unfortunately) disengaged audience. By building trust and engagement through financial education, proactive funds can build financial literacy and stronger relationships with members.
Firstly it’s essential to understand what members don’t know… but should know and how it can benefit them. A commonly misunderstood topic is compound interest and its benefits. We in the financial services industry know the magic and power of compounding and how it can work to help build wealth. However, we take this knowledge for granted and probably assume “everyone” knows how it works. In reality, financial literacy levels in Australia are low. Surveys over the years have confirmed this, with this one in the Australian Financial Review# being just one example.
Thankfully, it isn’t too difficult to explain with the right tools so let’s share the magic of compound interest!
Why members want to know (they just don’t know it yet)
The beauty of compound interest is it’s one of the easiest ways for members to make/save money without really doing anything. It may sound too good to be true, but for once, this one is genuine, and there are many ways to prove it to members. However, we often forget we need to communicate differently and use different concepts with members, than those we in the industry are familiar with.
Why funds should share their knowledge
Lifting the financial knowledge of your members around compound interest helps build a stronger connection as their trusted, reliable financial partner. It also creates an opportunity to share the benefits of long-term investments, savings, the importance of super, and the value of making voluntary contributions. Helping your members build interest is more than just financial.
Our tips to build members’ interest (see what we did there):
1. Start the conversation
Everyone likes the idea of financial gain for little effort, and that’s what compound interest in super can deliver. And it can do it in two ways:
- Patience – by letting investments grow over time through compound interest.
- Action – by adding to super and potentially accelerating that growth.
A great way to kick off the topic is to ask members this question:
Would you prefer to have $1 million today, or start with $1 today and have it doubled every day for a month?
Then reveal that if they chose the second option, by the end of 30 days, they’d have over $10 million – thank you compounding!
Sure, this is an extreme example, but it’s also an attention-grabbing way to spark a conversation about how compound interest can be a powerful yet easy strategy for growing their super balance. And they don’t even need to do much or be particularly financially savvy.
2. Explain the concept
You’ll then need to explain how it actually works. We love an analogy, and the snowball is our favourite to demonstrate the continual growth of compound interest. A simple analogy keeps the topic relatable and easy to understand for those still expanding their financial literacy.
3. Deliver the message with variety
Explaining compound interest should be the easy bit. Firstly grabbing the audience’s attention can be the more significant challenge, and engaging customers through education needs to be much more than just an article and some cute snowball graphics (although we have those at the ready!).
You may capture those specifically interested in compound interest, but miss everyone else – and they’re the ones you truly need to engage. Instead, a multi-faceted approach is necessary, drawing on a variety of channels and methods, such as:
- Email campaigns
- Thought-starters and questions
- Online tools to engage and demonstrate
- Videos and animations
- Social media
- Engaging web content
- Relatable examples and comparison scenarios
- Fact sheets and info packs
This is where we come in (with or without snowball).
Through our experience in making complex topics understandable and relatable, we work with you to develop a multi-channel campaign to deliver the message in a way that makes sense and is engaging, memorable and even enjoyable.
After all… isn’t it all about building interest?