I love my daughters, they are part of Generation Z, Post-millennials, not yet in the work force, but living a life of wonder – music festivals, smashed avocado and Instagram. Facebook for them is an anachronism they occasionally use to let their parents and grandparents have some insight on their lives.
But I now know what drives them, FOMO! It’s a real word, in the Oxford dictionary since 2013. FOMO stands for “Fear Of Missing Out”. It’s the fear that your peers know something you don’t or are doing something you’re not. It drives behaviour and it can be addictive, as people strive to do what they think everyone else is seemingly doing. This is true of my daughters who constantly benchmark their lives against the world.
This is great news for the pensions industry, albeit we could do with a bit of a rebrand. (I don’t think anyone likes the word pensions), we just need to give them the right benchmarks.
Way before the impact of social media we called this “Keeping up with the Joneses”. This originally came from a comic strip of the same name in New York 1913-40. Fuelled by the development of advertising as a commercial communication tool, the idea promoted conspicuous consumption. Now we keep up with the Kardashians. This will surprise my daughters but in reality, FOMO has been around for over 100 years!
As a communication tool, FOMO gets people’s attention and triggers behaviour. Put simply, it works. It appeals to our inner competitiveness. To eliminate that feeling of missing out, we strive to obtain that thing that we think is making other people smarter, happier, cooler (maybe that’s a Dad word) or better off.
So, let’s make sure we are using this powerful force for good (and not for evil) in how we drive behaviours in the retirement savings world. For example, how would you feel if you discovered that the person sitting next to you was being paid more than you? As soon as this is visible most people want it rectified. Quite rightly the publishing of gender pay gaps has driven this behaviour.
If someone isn’t in the pension scheme they are effectively being paid less than those who are. If someone isn’t taking full advantage of employer matching, they are being paid less than someone who is. If someone is not using the salary sacrifice benefit they are likely paying more tax and making less saving than those who are. These are “moments of loss” and triggers for behavioural change.
All of these “moments of loss” are easy to model and visually display. As long as the act of change is simple we can create new savings behaviours.
Now I’m going to try this on my daughters, albeit at the moment when they think of savings they think of my savings, not theirs.
Managing Director & CEO