Here’s the bad news: Generally speaking, Americans aren’t doing enough to save for retirement. But the good news is that many realize they need help with their financial planning. In fact, results from the 2015 FSFE Employee Financial Wellness Survey indicate that 83 percent of employees would be open to meeting with a CFP® professional (if the costs were covered by their employer), and studies by Financial Finesse reveal that 93 percent of employees make finance-related improvements within 30 days of receiving financial education. Clearly, advisors are well-positioned to help increase retirement plan participation.
But how can you work with plan sponsors to drive participant engagement? To help answer this question, I’ve outlined five steps you can take to help increase participation in the plans you manage, as well as improve the overall health of your plans.
Step 1: Educational Campaigns
The first step to consider is an educational outreach campaign. Centered on topics such as saving, investing, and retirement income, these campaigns lay the foundation for financial education: helping participants feel more comfortable with plan terminology and focusing on what they should keep in mind as they begin to plan.
Educational content lends itself well to quarterly outreach. Also, you might leverage components of the campaign (e.g., presentations or worksheets) as stand-alone items to support one-on-one conversations with participants or ad hoc requests.
Step 2: Targeted Messaging
The second step to help boost plan health is to provide targeted messaging by segmenting your outreach and correlating content. Here, you could:
- Send a “retirement checkup” invitation to employees over the age of 50
- Host a webinar on optimizing social security income
One benefit of targeted messaging is that you can align content with plan sponsor goals. For instance, if your plan sponsor wants to ensure that participants are using the available investment options appropriately, launch a campaign targeting participants who may not be using target-date funds as intended or those who are too heavily invested in one fund. Messaging within the targeted outreach will be more effective than broad-based education, and participant engagement rates should reflect that.
Step 3: Multiple Communication Channels
No matter the participant outreach strategy, it’s important to use multiple communication channels. Of course, communication preferences are trending toward electronic media. But print components are needed to reach participants who may not be in front of a computer all day or who like to have something in hand when speaking with a spouse or partner about planning decisions. The goal is to meet participants via their preferred communication channel, whether it’s e-mail, print, phone, or online.
Step 4: Proactive Outreach
Proactive outreach can help improve plan health and overall use of advice services. One example that illustrates this strategy comes from an advisor office in Overland Park, Kansas. To differentiate itself in the marketplace, this firm has taken the one-on-one participant meeting to the next level.
Over time, the firm realized that they were often the only advisor for some employees. Although the firm was consistently present in the workplace, employees weren’t making time to meet with them. How could they meet their responsibility to help ensure that employees had the most successful retirement possible?
To start, the firm began proactively reviewing participant accounts and noting red flags. Specifically, they looked for employees who:
- Invested in only one fund (unless a risk-based/target-based fund)
- Invested in all funds the plan offered
- Weren’t contributing enough to get the full employer match
- Were over age 50 and maxing out the plan but not using the catch-up provision
- Qualified for but were not taking advantage of the saver’s tax credit
The firm then reached out to employees by phone and a follow-up e-mail. They also consistently notified the plan sponsor and owners when reviews were performed and provided the response rate.
The proactive reviews have had a positive reception, and the firm sees the needle moving on participant engagement and overall plan health. Plan participants are more interested in meeting with the advisors when they are on-site because those participants know more about what the office does for them.
Step 5: Presence in Plan Sponsor Communications
The final step is a consistent and steady presence in the plan sponsor’s internal communications to supplement your proactive outreach efforts. This presence will help keep your services top of mind when plan participants are looking for resources. A few placements you might consider include:
- New hire packet. Create an overview of the 401(k) plan and services your firm offers that plan sponsors can include in their new hire kit—a great opportunity to reach participants as they enroll in benefits.
- Open enrollment. Open enrollment season is a busy time for plan sponsors, but it’s also an excellent time to engage plan participants. Take advantage of the urgency around the open enrollment deadline and the decision-making mind-set of employees who are selecting their benefits for the upcoming year. You’ll likely see a higher engagement rate if you can get your call to action bundled with the plan sponsor’s other employee benefits information.
- Plan sponsor intranet site. Most plan sponsors have an internal communication vehicle (e.g., an intranet or human resources page). Be sure to provide your plan sponsors with a one-pager on your firm, your company logo, and any resources you think would be helpful. Once the resources are in place, there is little maintenance required; from there, any employee engagement those materials generate is all upside.
Promote the Value of Saving
Workers and retirees say they spend little time doing retirement planning. Consequently, there is a significant gap between retirees’ level of confidence and their actual preparedness. By proactively promoting the value of saving—including following the steps above to implement creative strategies to help drive participant engagement—you can expect to see a marked improvement in the overall health of the retirement plans you manage.