When nudges become shoves

ifa

Nowhere is this more dangerous than in the context of retirement income – and the growing push by some superannuation funds to “nudge” members towards their own in-house products. Under the Retirement Income Covenant, super funds are obligated to help members plan for income in retirement. That’s an important step forward.

But we must be crystal-clear: helping is not the same as steering. And yet, if they have their way through proposed legislative reforms through the design of online portals, pre-filled journeys, default pathways and selective framing, funds will be able to guide members toward retirement income solutions that are profitable for the fund and ensure member and FuA retention – regardless of whether they are the best fit for the member. Let’s not pretend nudges will be neutral. In commercial propaganda terms, they are based on deep behavioural insights: that people avoid complexity, default to what’s familiar and tend to follow the path of least resistance. In a market where many retirees won’t seek personal advice, a carefully designed nudge can easily become a hidden shove.

The rest of this article can be found at ifa.com.au.