The third in Mike Lee’s on convergence in wealth and asset management
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An engagement breakthrough?
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Global Leader, Wealth & Asset Management at EY
My three sons all love computer games, and I completely understand why. It’s just so much fun to dive into a fantasy world – and one where I’m the master of my own destiny. Game creators have an incredible ability to create complex worlds that are easy and exciting to explore. This amazing dynamic exerts a strong pull over every gamer.
In a fascinating example of convergence, wealth and asset management firms are hoping they can pull off the same trick. They are betting that gaming techniques will let them create enjoyable, empowering moments – and habits. Ultimately, these firms believe that gamification will revolutionize client experiences and relationships, leading to improved investor loyalty and better investment outcomes.
To understand why gamification can be so powerful, we only have to look at its ability to overcome the barriers that stop so many investors from achieving their potential. We’re all familiar – perhaps too familiar – with these obstacles. Financial planning and investing are complex activities that, ironically, can feel unrewarding. And while most of us understand the importance of long-term goals, they often seem remote from the challenges of our everyday lives.
From fantasy to reality
When I consider how to make complex subject matter resonate, I think back to a US TV program I watched as a child called “School House Rock.” While I didn’t realize it at the time, these brief cartoon commercials – which explained topics like how bills are passed in the government – taught me lessons in a memorable and engaging way. If the investment industry builds on this behavioral approach, gamification could be invaluable in educating clients.
By engaging clients in a fun and intuitive way, gamification has the potential to overcome these problems, making complexity simple. It can also empower users, giving them the tools to navigate the investment jungle and succeed in their own, personal financial quest. In fact, it could prove to be a great way to explain concepts such as risk and reward, or compounding, that firms often find so hard to communicate.
These are bold claims, but they’re backed up by the way that gamification harnesses human responses. Just think about the way that computer games “teach” complicated goals and techniques without even seeming to try, and the way they use incentives and rewards to keep us wanting to “move up a level.”
Collaborating to compete
So how might the gamification of financial planning look? Clients would interact with their personal and financial goals through their firm’s game-based app. This approach could use retail bonuses like a free latte to reward initial engagement (based on analysis of customer data – see my previous blog), and harness gaming techniques to encourage clients to work toward investment goals to meet their desired outcomes. It might even provide a virtual reality simulation of investment benefits for clients and their families. This would allow clients to visualize the benefits of their financial decisions, creating a stronger emotional desire to achieve their investment goals.
By creating a more tangible future, gamification could be a huge savings motivator for investors. Imagine setting a savings goal for your dream home, and being able to build, design and even tour (via virtual reality) a mock-up home based on your budget. Or how about seeing your child receive their diploma as they graduate from the college of their choice?
Gamification isn’t just about making investing fun, or empowering investors. It’s becoming a serious business. Wealth and asset managers of all sizes are developing their capabilities. And this is no niche strategy. Gamification can be applied to mass affluent, high-net-worth and institutional relationships. For example, insurers or pension funds could use gamification to help their own investors build a stronger connection between their finances and their real lives.
The views reflected in this article are my own and do not necessarily reflect the views of the global EY organization or its member firms.
It will not be easy to deliver on the immense potential of gamification. Firms will need to collaborate across a number of industries, and success will be driven by a novel combination of behavioral science, brilliant coding, investment knowledge, virtual reality and data analysis tied to real-world rewards.
For firms, the bottom line is that gamification could revolutionize client relationships and, in doing so, improve investor outcomes. It has the potential to create a virtuous circle of engagement, learning, trust and loyalty. Having more engaged and empowered investors will open up new opportunities for firms and clients alike, and may even pave the way for further industry convergence in the near future.
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