By Richard Dale Creative Director, Spark Green| Posted: 29 June 2020
2020 has been a hell of a year. Just as we were getting our breath back from the summer bushfires, the coronavirus hit with an almighty bang.
With the government introducing two stimulus packages that affect fund members, the Early access to super to super program and JobKeeper, funds have had a lot to think about.
On top of communicating to members about these programs, funds have also had to think about the large number of members moving their investments to cash-based strategies in response to the volatile share market.
Cutting through the noise
There has been a staggering amount of information, news and opinion generated about Covid-19, and the situation has been changing so quickly it’s been hard to keep up. Much of this information has been about the impact of the virus on the economy and the employment market.
We recognised the challenges that funds would face in quickly and effectively communicating to their members about the impact of all this uncertainty on their investments.
We got to work on a range of gadgets and tools that would allow fund members to access clear, simple and highly relevant information on the important things to consider around coronavirus and their finances.
Early access gadget
The concern around giving people early access has been about the negative impact it will have on people’s financial position when they retire.
The temptation to spend now rather than save for later is often too much, especially for younger people, who have been affected more by the impact of the shutdowns on the economy than any other group.
This has been demonstrated by recent data that shows the majority of spending from early access to super has been on non-essential products and services, including a large amount on alcohol and online gambling.
Our Early access to super gadget shows people the effect that withdrawing money from their super now will have on their balances when they retire, based on their age and withdrawal amount.
This shows members the impact of early access so they have the information to make an educated decision for themselves, rather than telling them what they should do.
JobKeeper eligibility tool
We developed a simple and effective tool for members to quickly assess their eligibility for the JobKeeper program.
The tool helps members understand if they could be eligible based on their personal circumstances.
Members get the information they need, while being educated on an alternative option to the Early Access to Super program and easing the pressure on funds’ call centres.
Shares vs Cash gadget
After the share market plummeted, many fund members made the defensive move to switch their investments from share-based to cash-based strategies.
During all this financial uncertainty, this is a move that seems to make sense.
However, what many members don’t understand is that a long-term view should be taken on super investments, even for those close to retirement. The market has always recovered from slumps in the past, and members risk missing out on a large amount of growth as the market recovers if they keep their super in cash.
The Shares vs Cash gadget demonstrates this idea in an easy to understand way, showing them the effect on savings that moving different amounts from shares to cash would have had after past dips in the market.
In every market dip for the last 100 years, shares have performed better than cash in the five years following the dip.
While Australia has made excellent progress in containing the spread of the virus, the reality is that its impact on the economy will continue to be felt for quite some time.
It will remain vitally important for funds to effectively communicate with their members on the financial uncertainty they are facing.
Speak to us for more information about these tools or if you want to talk about creating a your own custom solution.
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