CHRISISM #57 - Terminology Time - "Superannuation"

09 January 2018

Have you ever encountered a negative reaction from a prospect or a client when you mention superannuation? If so, maybe it’s time to consider using alternative terminology..

When I first arrived in Australia from the UK back in 1989, I distinctly remember when I came across this thing called superannuation for the first time. “What the hell is superannuation?” I asked myself as no such thing existed in the UK – all we had were pensions.

Therefore I conducted extensive research on this new concept called superannuation, and when I looked into it in more detail, I thought “Wow! This superannuation stuff is amazing – just wait until I tell my clients about it!

So I was somewhat taken aback when, having introduced superannuation into the conversation at the earliest opportunity, many clients responded by saying something like “Oh, don’t talk to me about superannuation – I don’t mind talking about property or shares when it comes to investments, but whatever you do don’t talk to me about superannuation!” Once I’d picked my jaw up off the floor, I realised that the perception of superannuation amongst many Australians was far from a positive one!

So I determined to change my terminology, and what follows is a classic example of the need for us to talk to clients about what products DO for them not what they are, sell the benefits not the nuts and bolts, or as we used to say sell the sizzle not the steak!

Therefore, from that moment on, I never talked to clients about superannuation, but I would always ask them if they liked the idea of securing their income for after their working life, and almost without exception everyone was keen on the idea of securing their income for after their working life! Then I would ask one more question:- “ Tell me, if you had the choice, would you rather do that in your tax environment or in a minimal tax environment? When they all told me they would rather do it in a minimal tax environment, then I knew they actually loved superannuation – they just didn’t understand it! And I also knew I had to avoid using the word “superannuation”!

Let me finish by giving you one specific situation in which I strongly recommend you use the above terminology, and this is when you pre-position the percentage concept in relation to the cost of their personal protection package (see Chrisism#1).

When you get to the retirement planning section of your Fact Find, I recommend you always ask

1) “What percentage of your income is currently being allocated to securing your income for after your working life?” Answer for most employees:- “9.5%”

2) “Out of interest, what percentage of your income is currently being allocated to securing your income for during your working life” (this will be the specific purpose of their personal protection package) Answer typically “0%”

3) Tell me, which of these income streams i.e. during your working life or after your working life is more important to you right now?

I believe this is a fantastic way to give your client a proper perspective on the real cost of their personal protection package, and it opens the door for you to refer your clients back to the percentage concept whenever the ugly spectre of cost rears its head.   

The Risk Workshop by Chris Unwin

Are you a financial adviser who would like all of your clients to have appropriate types and levels of personal protection? But perhaps you feel you need a more structured and client friendly engagement process?