The emotional visibility of investments can drive stronger member engagement and potentially better financial outcomes, according to Schroders CIO of the Climate Plus Fund, Vikram Bhandari.

Speaking in a session at Pensions UK's Annual Conference, Bhandari highlighted the benefits of private market investments in enhancing member engagement.

He explained that the “main powers” that come from these types of investments include better expected outcomes for members, a smoothened investment journey and live, relatable, living data.

“This means that there are investments people can see, can feel and really be proud of,” he said.

Echoing this, Quietroom chief executive officer, Chloe Taylor, said Quietroom’s research has shown that when people understand their pension investments have a positive impact, they care and engage more.

“When talking about these sorts of investments, particularly when it has a positive impact, whether it's sustainable from a climate perspective or socially with things like building houses and hospitals and infrastructure, people's feelings towards their pension change - people care more and start to engage more,” she said.

She explained that this understanding and being able to see what their pension is invested in makes people want to participate more, as they can see a benefit that's more “present and immediate”, which may also be aligned with some of their values.

However, Taylor cautioned that this doesn’t necessarily lead to a behavioural change.

“What this doesn’t guarantee and what the evidence hasn’t shown yet is that purely these sorts of investments are the silver bullet to unlock people changing their behaviour,” she said. “So, the question is, how do we get from positive intention to action?”

Quietroom’s research showed that six out of 10 people said that once they really understand these sorts of investments and felt good about them that they would contribute more to their pension – but many fail to follow through on this.

Taylor suggested that this gap in action and intention is the user experience and the journey.

“It is going on that app or going on that website or trying to dig out that piece of paper in that drawer and do something about it,” she said.

“And if barriers are there and it's not really easy, straightforward and done in a way that gives members real confidence that that choice they're making is going to be positive, then it is very quick for people to fall off that journey.”

She emphasised the importance of combining technology, user experience and design improvements so that when people see these projects, they can take action that is easy and can be confident in their actions.

Bhandari also stressed that it was “crucial” that people understand that investing for impact or making a difference doesn't mean sacrificing performance.

“In reality, sustainability and positive impact kind of work hand in hand and can actually be a driver of robust long-term returns,” he said.

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