“The main risk of a pension product is the risk of not reaching the individual’s retirement objective” Following up onto my concerns about the misincentives in the life insurance market I attended a Roundtable organised by BETTER FINANCE - European Federation of Investors and Financial Services Users as part of the #EuropeanRetirementWeek2023. In the discussion, impressive figures were provided that deal with the extent to which (1) the high distribution and product costs across Europe have a negative impact on the real return of customers and how (2) an investment policy based on loss aversion pushes customers into products that are too conservative for the investment objective. The focus on real net returns, after costs and after inflation, shows a frightening picture: most investments lead to negative returns for the private investors. If the life insurance market is serious about #customercentricity, there must finally be an honest discussion about how "the main risk of a pension product not reaching the individual's retirement objective" can be averted. My personal two key takeaways to achieve this objective are the following: 1. insurers must finally start providing full transparency on the cost structures and real net returns of their investments. 2. all of us, as society and as private investors, must manage to overcome irrational behaviour patterns in financial investments. #behavioralfinance provides an important knowledge basis for this. Sweden is once again leading by example and shows how the application of these findings can lead to successful behavioural changes in the society. For those interested, I can highly recommend the recording of this roundtable.
As part of the #EuropeanRetirementWeek2023, BETTER FINANCE hosted a Roundtable exploring strategies for bolstering pension adequacy. For a decade, BETTER FINANCE has flagged the persistently low real returns in EU long-term and pension savings. This year's BETTER FINANCE study reaffirms that, on average, most long-term and pension savings fall far below capital market returns. The risk to pension adequacy is substantial. The Executive Summary of the 2023 Edition of the BETTER FINANCE pensions report is available now on our website, with the full report to be published soon! Find our latest Press Release below. ℹ Read the BETTER FINANCE Press Release: https://lnkd.in/d_RbyXuK ℹ Watch the Roundtable here: https://lnkd.in/d29AqZHU
