To Improve Retirement Readiness, Retire Shame

Empathy: The Bridge to Engagement

After more than 10 years with Maddock Douglas, an innovation consultancy with a large footprint in insurance and financial services, I’ve learned a lot about ways to predict what the future wants from an industry or business. We did a prediction study in 2020 around the post-pandemic future of human advice, across industries that rely on intermediaries to sell products and services. One of the many compelling predictions is that empathy, within the next 3.6 years, is 77% likely to be more important than credentials when selecting an advisor. In addition, within a similar timeframe, it’s 67% likely that technology platforms (e.g. Uber or TripAdvisor) that help the financial advisor understand people’s deep-seated attitudes and needs, and deliver seamless, elegant solutions will be more important than a brand affiliation. So how do we move from empathy to action? Engagement.

Maddock Douglas’s co-founder and CEO, Mike Maddock, says “Despite the fact that billions of dollars have been invested in ‘digital innovation’ nobody in the industry has stopped and considered how to deliver empathy at scale. There is a huge opportunity to create a digital platform that engages pre-retirees at a personal level in these big decisions. While, pieces of the puzzle exist within different fintech and insurtech startups, the real missing link is at the top of the funnel –– where people meet people. With the proper measure of insight, targeting and consumer understanding, technology could be used to create the empathic engagement that leads to action. We believe that soon, someone will put it all together and dominate the industry.”

We are just now seeing data from pioneers in this space. One group attacking this “top of the funnel” engagement challenge reports over 50% conversion rate when harnessing a hyper-personalized, behavior-driven, non-judgmental approach to boomers and decumulation.

That engagement is not around calculating “your number”, causing self-esteem to plummet by the deliberately embedded inadequacy into the model. Rather, it’s engagement around you. That’s where we are seeing innovation today.

Engaging Around the Right Thing

Instead of how much you have saved or will save, how about what you value? What bugs you? What excites you? How do these things translate into an experience of learning about yourself? There’s a reason why Facebook quizzes, horoscopes and personality type tests are endlessly fascinating to people. The subject is you. And not in the light of what makes you better or worse… rather, what makes you special. Most importantly, it’s not just engagement with a tool, it’s also engagement with a person.

Given that the human element is lacking, and behavioral science is only just starting to be leveraged into the retirement industry, how do we fill the gap? First, isolating the critical part of the journey, as Mike Maddock said, at the top of the funnel. Said differently, examine the moment when people are open to learning about themselves in the context of their future, and then turning it into an active desire to seek personalized, customized advice from an empathetic, knowledgeable human being.

With so much emphasis in the last 5 years on digital disruption, it’s very possible we are throwing the baby out with the bath water. Digital technology can eat certain tasks of an advisor, but it can’t, and likely should not, eat the job of being a human. So instead of trying to make the robo do the whole job of creating awareness, educating, driving action, transacting the sale and servicing, instead we should be looking at the robo and the human as a division of labor. To that end, the role of technology at the top of the funnel is very different than in the middle or the end of it. At the top, it’s to engage, and drive people toward advice, not just toward a product or a behavior. In the middle, it’s to make the transaction simpler, faster and more accurate, both for the consumer AND the advisor. And then at the end, to make it easy to tell the world about the experience.

The American Dream Lives on a Two-Way Street

Who is truly taking on the task of creating positive engagement that drives people to seek empathetic advice from a professional? Perhaps the first step is having advisors who truly want to help people, then having a model to do so efficiently, so that someone’s current wealth doesn’t dictate their advice worthiness. Once people know they are worthy of advice, they will be less likely to feel shame, and more likely to seek out advice.

If there’s one thing the pandemic has taught the world, it’s that we can collaborate and do business virtually, and dramatically reduce time and cost of travel. Perhaps with this new knowledge, more advisors will be willing to work with people who don’t meet the former thresholds of investable assets, but truly need help. We just need to finish the job of creating the platform to make it happen, and letting the world know we are ready, willing and able.

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Maria Ferrante-Schepis, CLU, is president, insurance and financial services, for Maddock Douglas in Elmhurst, Illinois.