Every year IQ Group holds their Seasons Art Competition, open to the children of IQ Group staff and family. It was a very tough choice, but this year’s winning art submission was from, Adhrit, aged 5, son of our own Pranitha Nagineni. We look forward to seeing more great artwork artwork from him in future. Congratulations Adhrit!
On behalf of the team at IQ Group, we would like to wish you all the very best for the holiday season.
Here are the amazing submissions we received:
Adhrit: Age 5
Organisations around the world are realising that the concept of gaming and gaming elements have become ubiquitous in our daily lives. Whether on our phone, via the internet or through various devices, we are exposed to gaming elements. Think about your everyday journey to work. The mobile game apps you play with, the badges you earned because you’ve hit the target with your smartwatch or the loyalty points you received for shopping. When we think of games, we think of fun and the feeling of exhilaration when we win or complete an adventure.
noun gam·i·fi·ca·tion (Merriam-Webster) the process of adding games or game-like elements to something (such as a task) so as to encourage participation.
In Mercer’s 2020 Super Fund Executive Report (Mercer, 2017), the findings were that 39% of superannuation funds rated ‘improving member engagement and service’ as their top business and strategic priority. However, the industry is faced with a growing distrust and disengagement from Australians ranging from millennials to the indigenous communities. Key findings to this growing problem is the lack of understanding on how superannuation works due to a lack of financial literacy linked to superannuation. How can the industry transform a mundane topic into something fun, sticky and engaging?
Perhaps, the first area to address as an industry is to explore designing mobile-based learning apps that will help teach financial literacy linked to superannuation. When we asked our millennial friends what mobile apps they use to learn about financial matters and why, apps like Raiz (formerly known as Acorns) and the Commonwealth Bank were mentioned because these are interactive and teaches them to save. Millennials are known to make a difference to change the world. Imagine a mobile learning app that teaches them how to ethically invest via their superannuation fund by selecting investment options that invests in sustainable initiatives.
There are key principles to building an interactive learning experience by applying gamification elements:
- Learning must have contextual relevance from a strategy, culture, and values perspective. Learning needs to be relevant to real life and games can be used to simulate this.
- Learning is most effective when learners are intentionally and repeatedly exposed to a cycle of learning, practicing, reflecting, and then repeating. This can be built into the game mechanics.
- Learning becomes engaging when users share experiences through high scores badges and leader boards. The competitive streak in some will kick in to try harder and achieve more.
- Learning is an experience as opposed to a once-off event; entails a process of learning over time, by creating a game that is not time boxed.
- Learning is a social experience, and a gaming environment allows learners to exchange ideas, and gain understanding from collective or shared experiences.
- Learning should provide instant feedback.
A gamification example using these principles is IQ Business South Africa’s online learning delivery to a major bank spread across Africa addressing a serious topic on resilience. Users click on a secure browser link which brings them to a game show room, complete with game show host, avatar selection and a ‘Wheel of Fortune’ like spinner that randomly chooses trivia topics. Users earn points with correct answers and learn why immediately when they select the wrong one.
Organisations that intentionally incorporate gamification understand that gaming is age irrelevant. The gaming appeal is about the game mechanics and associated individual preference, not demographics. Gamification should embody the brand and culture of the organisation. So, the game mechanics should be customised to teach users what the brand stands for. A great example of this is Siemens faced with major branding and communication issues to a diverse set of internal and external stakeholders. Their solution was designing Plantville, an online gaming platform to give the experience of being a plant manager. Players are challenged to maintain operation of their plant while improving productivity, efficiency and facility health. The online game hit the mark with their target stakeholders and more. Stories about Plantville were featured in more than 235 outlets, reaching more than a million people.
Games unleash “people’s natural desire for competition, achievement, status, self-expression, altruism, & closure.” JD Dillon
Source: IQ Business South Africa
Gamification design elements have structure and content. Structure consists of points collection, leader boards, levels of difficulty, badges and rewards. Content consists of challenges in progressive stages, stories that are captivating, avatars or characters players can take on, time-bound tasks and freedom to fail (include ability to respawn to try again). Behavioural science research shows that
gamification can instil behavioural change depending on what the game is teaching, engaging and motivating. Popular gamification technology used are game design tools like Unity and Unreal Engine.
Gamification is also becoming a popular method to engage with customers as it encourages participation, engagement and loyalty. Think of what superannuation members should interact with. The website, the app, the social media page or all three. Then integrate game mechanics to draw them in regularly.
There are a handful of superannuation funds that have some degree of gamification in the form of retirement calculators where you enter financial data, receive a ranking and see where you are likely to retire in e.g. a poor house, a big house or someone else’s house. Members can plug in different numbers to view different results. This is a start.
Consider gamification from onboarding members. Can they earn loyalty points by completing a survey of the onboarding experience? More points given when they visit their account to complete a task on the website? The points can then be converted to a tangible reward or even donated to a charity of their choice.
The use of gamification should always be linked to the overall fund strategy. Which member segments would funds like to increase engagement and interaction with? Is this about increasing membership growth or a preventative strategy to stop further decline in the member segment? Design games with an audience in mind. Get to know the target member segment, what their preferences are, how they like to be communicated and leverage on technology to reach out to the segment.
The question of ‘what to gamify?’ should be answered by your members. Add gamification to what members care about and something they value. Otherwise incorporating game like mechanics that do not serve an end purpose will be a complete waste of time.
The future of gaming will invade the corporate world as technological rapid advancements such as Virtual Reality (VR) and Artificial Intelligence (AI) are used in the gaming experience. We will see playing freedom across platforms allowing users to move device platforms without any gaming interruptions. Online gaming spectators will become a norm. As user experience and functionality continue to enhance, players can shape, enhance and control their game play. We will also see an integration of social media into gaming. And gaming will require physical involvement of the participants. Online gaming will be social.
HIQ Learning Services, a company of IQ Group Australia has teamed up with its sister company IQ Business South Africa to incorporate gamification elements to learning and customer engagement. Back in July 2018, in celebration of Nelson Mandela’s 100th Birthday, IQ Business South Africa in collaboration with VictoryVR, developed the virtual experience that brings users into Mandela’s shoes. The journey, created in virtual reality, enables users to stand on the hills of Mandela’s childhood to his prison cell on Robben Island.
Imagine a VR experience that can be built to teach the next generation of Australians, like a ‘choose your own adventure game’. The choices they make in different phases of their VR life can lead them into a desirable retirement or not. The time to incorporate gamification is now. Our future is game ready. For more enquiries about gamification, contact firstname.lastname@example.org.
Written By: Cynthia Cheong, Practice Leader for HIQ Learning Services, a company of IQ Group Australia
Adi Stephan, Head of Learning & Development, IQ Business South Africa
All financial services organisations should be setting up remediation projects to investigate their past and present practices, to identify examples of misconduct and ‘conduct not meeting community expectations’.
Many organisations across financial services – not just those put under the spotlight by the Financial Services Royal Commission – are undertaking major programs of remediation work. Many of these entities are super funds. While industry funds generally fared better than their retail fund rivals, the Royal Commission nonetheless identified problems across both sectors.
In the wake of the Royal Commission, the regulators now have a renewed interest in addressing failures in service delivery by super funds and other institutions.
While (for example) ASIC has had a ‘fee for no service’ project since 2015, they may be taking a harder look at problems and a harder stance on the penalties that should be pursued. It may be found that both APRA and ASIC should have scrutinised grandfathered arrangements more than they did.
Both regulators are going to be more likely to pursue public enforcement instead of enforcement ‘behind closed doors’, and APRA is likely to be rigorous in pursuing the member outcomes assessment.
The Royal Commission has revealed a diverse range of problems across nearly all types of financial services organisations, and past compliance reviews are not a guarantee of a clean slate.
This is especially the case where organisations have ‘sailed closed to the wind’ in meeting regulatory change requirements. It’s not just a matter of checking that specific regulatory requirements were met. Super funds also have the responsibility to ensure that the best interests fund members are prioritised. These responsibilities cannot be conveniently ignored in the case of grandfathered members, as seems to have happened in some cases.
What should be done?
Remediation projects start with identifying issue where processes have failed and gaps may need to be uncovered. As organisations preparing for the Royal Commission sometimes discovered, the act of investigation can unearth problems that were previously unknown.
In a previous career, there was a saying that “if you don’t think you have a unit-pricing problem, it’s only because you don’t know about it.” In today’s world, there should be no excuse for not hunting down errors that cost members money.
The prioritisation of issues for remediation will have regard to the size and complexity of the problem, the level of resourcing and timetabling needed, whether it is isolated or system and whether it relates to any existing remediation activities. However, all of these factors need to be looked from the perspective of members’ best interests, and the processes for advising and keeping members and the regulators informed.
It has been striking how long it took for the regulators to be advised in some of the cases before the Royal Commission, with it often taking much longer for members to be told. Financial institutions hold vast amounts of data but the level, quality and timeliness of data analysis in these cases – and reporting on it – was often found wanting.
Process Improvement & Governance:
The remediation process must also lead to process improvement and a focus on continuous improvement. Unnecessary hand-offs, delays and wastage, tasks that don’t add value, and inadequate performance management are sometimes found during the review process.
This is not just an operational exercise. Appropriate governance structures need to be put in place to ensure that remediation is not just about ticking off a list of fixes. Acting in members best interest needs to be assessed, as does ensuring the most efficient and cost-effective approach is taken, and that related and systemic issues have also been addressed.
Taking a Holistic Approach
The IQ Group has been undertaking analysis into compliance adherence, process and data analysis, project and change management, training delivery and team management, and are pleased that many of our clients are undertaking remediation management extremely seriously.
Written by David Haynes
If you would like to find out more or have any question, please send them through to us at email@example.com.
Insurance within Superannuation accounts makes up almost half of the insurance market.
Approximately 12 million Australian’s hold some type of insurance via their superannuation account. With the issue of insurance in superannuation impacting the lives – and livelihoods – of so many Australians, the Productivity Commission has taken a much closer look. From zombie policies to member disengagement, we examine the key call-outs from the Productivity Commission on whether insurance in superannuation provides value for money to members.
The Argument for Insurance in Super:
Despite being on the receiving end of a lot of criticism, insurance provided through superannuation still delivers an affordable insurance option to most Australians. The Commission found there to be many reasons to support insurance in super, including:
- Group Insurance Policies – Super uses a pooling mechanism to provide insurance policies to an entire group of people, called group insurance. Group Insurance policies can be provided at a cheaper rate than individually underwritten policies because it pools risk and reduces adverse selection. This means that an individual with higher risk factors can access insurance at a significantly cheaper rate than under an individually written policy.
- Opt-Out Arrangements – Super’s default opt out arrangement helps to address the reported problems of under-insurance. It provides a safety net to members who may have otherwise chosen not to take out life insurance – or were unable to. It can also financially benefit members who may not understand the importance of insurance.
- Financial Benefits – There are financial benefits to members paying for their insurance through super; members can pay using money that they cannot currently spend – and it is taxed concessionally.
What is Reducing the Value of Insurance in Superannuation?
Over a third of all member complaints against super funds were in relation to insurance. While there are both efficiency and member well-being benefits, the Commission identified a range of potential issues that reduced the value of insurance.
1. Member disengagement and lack of awareness.
The Commissions’ Survey found members were relatively disengaged, which made it difficult to a draw conclusion about their perceptions of value.
Most members had some awareness that insurance was bundled into their super account, but 24% had no idea. 16% indicated they knew they were paying for insurance but didn’t know what it was. Only 12% of members responded they knew a lot about insurance.
The survey showed that very few members amend or opt out of the default insurance cover. 78% of members reported never making changes to their default cover and only 6% had opted out in the past 12 months. The two most common reported reasons for not opting out were lack of knowledge (35%), and assuming the cover was appropriate (35%).
2. Inappropriate cross-subsidisation.
Cross subsidisation is the act of charging higher prices to one group of consumers to subsidise lower prices in another group. By averaging risks across a population of people, superannuation funds can offer group insurance at a relatively cheap rate.
But is appropriate cross subsidisation occurring?
For insurance to be of value, premiums need to accurately reflect the risk of the member. Some clear examples of risk factors that should affect a member’s premium include their age, smoking status, and occupation i.e. white vs blue-collar work. Unfortunately, ASIC recently noted that in some cases trustees had transferred members to different divisions of the fund and classified them by default as a smoker or blue-collar worker for insurance purposes. This resulted in higher premiums that may not reflect the risk factors of the member at all.
3. Low value policies.
The nature of group insurance means products can’t be tailored to individual needs. By providing insurance at a level that prevents excessive balance erosion for low income members, higher income members may find their automatic level of cover fails to meet their needs and preferences.
It could be said that poor tailoring of insurance can result in insurance that is low value and or causes excessive balance erosion for some cohorts of members. Funds need to use the information they collect from members to develop insurance cover that limits this undesirable outcome and better meets member needs.
4. Difficulty engaging with super funds on insurance.
Around 80% reported that modifying or taking out new insurance cover was somewhat easy, but nearly half had trouble when trying to opt out. This contracts with funds reports that their members were the most satisfied with the opt out process.
Unfortunately there weren’t enough responses collected to provide a thorough assessment of the insurance claims process, but some of the ASIC complaint findings indicated:
- The claims process involved raising awareness of insurance cover
- The process is complex and time consuming, and
- A substantial share of disputes were related back to the insurance claims process
5. Account proliferation.
It was estimated that 17% of members were holding two or more accounts with insurance in 2017. The premiums collected from these unintended duplicate insurance policies would amount to approximately $1.9 billion per year. Most of these additional accounts are likely to be inactive. It was estimated that there are approximately 3 million inactive accounts that also had insurance cover.
These additional accounts are costing Australian’s thousands over their lifetimes. It was estimated that a member with two super accounts from the age of 25 – 45 would be $55,000 worse off by the time they reach retirement than a member with only one account.
Balance erosion is especially bad for members with multiple accounts. These members may end up over-insured or find themselves unable to claim on the multiple accounts. These are also known as ‘zombie policies’.
So… Is Insurance Value for Money to Members?
For some members the default insurance in terms of premiums paid insurance in super is undeniably good value, and it can provide access to insurance for some people who might not be able to get individually underwritten insurance. However, better tailoring of group insurance to different member cohorts would improve the value of insurance to many members.
Unfortunately, there are many circumstances where insurance doesn’t provide value to members and can be detrimental toward their super balance – for example, younger workers with no dependants will get less value from life insurance, and low income earners will get less value from income protection insurance. For many, insurance provides poor value and does not meet their needs simply because they are uninformed and disengaged and do not elect to opt out as a result.
Questions? We’d love to hear from you. You can email us at firstname.lastname@example.org.
The development of new and innovative retirement income products has been plodding along in the background over the past few years, getting little of the media attention given to other superannuation issues.
Because of people living longer – a girl born today is likely to live to 84.3 years compared with 74.5 in 1970 – it’s important for people to make their super last longer. Most retirees with some super are in account-based pensions. People using these pensions are required to withdraw specified minimum amounts from their account balance each year. If you’re aged 65 to 74, that minimum is 5%. Of course, if your funds’ earnings are greater than this, your balance is not going to reduce!
Currently, if you run out of super, the state age pension is your ‘longevity risk product’.
However, these issues play in a different way from a government perspective. More people living longer means more tax concessions on the tax-free superannuation pensions, a more expensive age pension system to support, and an increasingly expensive health and aged care system.
The government has already pledged (but not yet legislated) to increase the eligibility age for the pension from 67 to 70, and has greatly tightened up the assets test for the age pension. This possibly leaves a few things on their list:
- Reduce the time between getting access to your super and being able to get the age pension (so you stay in the workforce and you don’t spend it all too soon).
- Link the age pension age to expected life expectancy.
- Encourage people to sign up for products that provide built in longevity protection.
The government is working on the last of these by proposing the introduction of a MyRetirement product (to be otherwise known by the ungainly name of CIPR – Comprehensive Income Product in retirement). Trouble is, these involve the use of annuities – and annuities have tended to be expensive, irreversible and inflexible.
Companies like Mercer and Challenger are extolling the virtues of their annuity products, and some super funds are releasing different types of hybrid products, but overall there doesn’t seem to be a big unmet demand for annuities.
The Financial System Inquiry (the Murray Inquiry) suggested that some form of CIPR should be the default retirement product but not all studies have endorsed this approach.
The Productivity Commission, for example, has recently come out and said a ‘MyRetirement’ default is not warranted. They concluded that the complex nature of individual and household financial circumstances means there is no single retirement product that can meet members’ needs.
Changing needs, work patterns and advice requirements also add to the complexity of this issue, and this author at least believes it would be a big mistake for the government to rush things or put mandated structures in place.
Funds are increasingly focused on improving the member experience for their retired and retiring members but it would be a mistake to think that the MyRetirement/CIPR framework is going to be delivering for funds anytime soon. Funds need to grasp the current challenge to provide better services for these members rather than waiting on the government to solve the problem for them.
Written by David Haynes
Outside of the workplace, employees make important decisions that affect the lives of the people around them everyday. However, those workers are rarely provided the same level of input and authority over how they perform their own jobs, lead and run a team, or make decisions that impact a customer.
IQ Group has decided to turn the traditional hierarchy model on its head, and embrace a ‘Natural Teams’ leadership approach.
Natural teams bring together a group of highly skilled employees and provide them the responsibility and authority to nominate their own team leadership.
By embracing natural teams, IQ Group seeks to achieve the things that matter:
- Help our people feel connected with their team and team leader
- Build teams that can adapt to changes in business, client or personal circumstances
The autonomy provided by the natural teams model takes full advantage of all team members’ skills, talents, experience, and ideas.
“Natural teaming should provide IQ Group with access to, and leverage of, as much of its talent as possible,” said IQ Group’s CEO, Brian Peters, “It is akin to a sporting team, where different players come onto the field at different times to help achieve the overall purpose.”
The teams that will form as a result of this new approach will not be a one size fits all; they will come in many different sizes, with many different skills, and work together harmoniously if they trust each other and have a clear view of our purpose.
The success of this initiative is dependent on employees having a strong trust in their team leaders, who will act in a way that supports and enhances our people, and our business. The move toward natural teams is the next step in our journey toward becoming a more agile and responsive organisation equipped to navigate what the future holds for us.
“We all play multi faceted roles, being both a challenge and benefit of the industry we work in – consulting, where two days are rarely the same,” said Peters.
To find out more about careers at IQ Group, make sure to check out our careers page: www.iqgroup.com.au/careers