Technology is transforming the retirement transition for everyone, including those without financial advisers. Digital tools are interactive experiences designed to engage users with a combination of personalization and gamification, making their retirement experience both real and relatable.
DC retirement plans are meeting participants on their own ground, wherever they are in terms of life cycle, preferences and learning styles. The entire industry itself has embraced a goal of improving personalization and sharpening communication to achieve higher participant engagement.
Made to measure
Personalization is a dominant trend in participant education, supported by advances in data and technology. The ease with which participants can upload data to personalize retirement planning continues to progress. Gamification exercises, such as showing how choices affect retirement goals by using inputs and assumptions, are another useful tool to further engage learning and planning.
Many plans still face the persistent challenge of trying to educate across many different personality types and a wide range of preferences, from those who want to be heavily involved in their 401(k) decisions to those who would rather leave their retirement vehicles alone to grow steadily on their own. How should a plan differentiate among participants in its treatment of such diverse attitudes? One possible solution is to default to the least active and enable those who want to be more active through a customized approach.
Providing a DC plan that offers pensionlike income can have a profound impact on participant behavior, for instance, by intensifying their commitment to their employer. Employers can dangle a track to lifetime income as bait for recruiting more talented employees ahead of the competition. Meanwhile, the promise of future security promotes retention and furthermore allows participants to retire on time. A reluctance to retire because of worry about outliving assets is a sorry predicament for an employee; it also has negative repercussions for the employer, because keeping people employed longer than expected can dramatically increase workforce costs.
Making personalized planning tools available and creating effective education campaigns can make retirement feel more immediate and attainable. Participants already understand the importance of retirement preparedness. Adding retirement income may require additional education, but it provides more than just improved financial security; it also signals to employees that their employer has made a’ long-term investment in their well-being.
The retirement conversation
Initiate the retirement income conversation well in advance of participants’ key decision dates. In addition to focusing on timing, plans also need to consider the participant’s unique experience.
Technology can be helpful. New digital tools translate savings into future income. For example, a record-keeping platform can provide a retirement income planner that incorporates personalized data, which is fully integrated with the participant experience online and through an app.
First, consider taking a multichannel approach to communication. It is unlikely one video will reach everyone to the same extent as, say, an email can; different participants consume information in different ways.
It is paramount that communications come from a source the participant recognizes and trusts, namely their employer, rather than the plan provider. Make sure to brand the communication from the employer, because that is where participants look for reassurance.
Finally, the content must be relevant to the end user. You will probably need different targeted campaigns directed at various audiences. Participants who are in the early days of their careers do not respond to the same messages as do those closer to retirement.
Embrace new thinking
Education about retirement income is a relatively new concept, because DC plans have not historically offered that type of option. It is incumbent on you to make sure that your employees have the tools they need to understand their investments and how to avail themselves of the income benefit. Words matter. Orient people to the benefit, its optionality and flexibility.
Plans are taking a more holistic view of participants’ individual circumstances to tailor solutions that provide a greater degree of lifelong financial security.
Talk to a qualified retirement professional about tools and strategies to engage your employees in securing their futures.