Most of us know that, in general, Americans aren’t saving enough for retirement. The good news is that they want help with their planning. The 2015 FSFE Employee Financial Wellness Survey found that 83 percent of employees would take the opportunity to meet with a CFP® practitioner if their employer covered the costs. What’s more, studies by Financial Finesse have shown that, after receiving financial education, 93 percent of employees make improvements to their finances within 30 days. Given these statistics, advisors are in a prime position to help drive retirement plan participant engagement.
So, how can you work with plan sponsor clients to grow participation in these tax-advantaged savings vehicles? Here, I’ll offer five strategies that you can implement to help increase participation in the retirement plans you manage, as well as improve overall plan health.
1) Start with an Educational Campaign
As you consider ways to engage plan participants, educational outreach campaigns are a great place to start. Centered on general 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, such as presentations or worksheets, as stand-alone, value-add items to support one-on-one conversations with participants or ad hoc requests.
2) Follow Up with Targeted Communications
The next step to help boost plan health is segmenting your outreach and correlating content. For example, you could:
- Send an invitation for a “retirement checkup” with your firm to employees over the age of 50
- Host a webinar focused on optimizing social security income
Another benefit of segmented outreach is that you can align your campaigns to specific plan sponsor goals. For instance, if your plan sponsor wants to ensure that participants are using the available investment options appropriately, you could 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. Your messaging within the targeted outreach will be much more effective than broad-based education, and participant engagement rates should reflect that.
3) Take a Multichannel Approach
No matter what type of participant outreach strategies you pursue, it’s important to take a multichannel approach. Of course, communication preferences are trending toward electronic media. But you still need to plan for some print components to reach participants who may not be in front of a computer all day or who like to have something to reference when speaking with a spouse or partner about planning decisions. Be sure that you’re meeting participants via their preferred communication channel, whether it’s e-mail, print, phone, or online.
4) Perform Proactive Account Reviews
Proactive outreach can help improve plan health and overall use of advice services. A great example of this strategy comes from a Commonwealth 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 with proactive employee touches.
Over the years, the firm realized that they were often the only advisor for some employees. But even by making themselves available at the workplace on a consistent basis, employees still weren’t making time to meet with them. What options did they have for meeting their responsibility to help ensure that employees have the most successful retirement possible?
To start, the firm began proactively reviewing participant accounts and noting any red flags. Specifically, they looked for employees who:
- Invested in only one fund (unless a risk-based/target-based fund)
- Invested in every single fund the plan offered
- Weren’t contributing enough to get the full employer match
- Were over age 50 and maxing out the plan but not taking advantage of 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 followed up with an e-mail. They also consistently notified the plan sponsor and owners when they were doing these reviews and followed up with the response rate.
The proactive reviews have had a very 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.
5) Build a Consistent Presence
To supplement your proactive outreach efforts, it’s important to have a steady and consistent presence in the plan sponsor’s internal communication vehicles. This will help keep your services top of mind when plan participants are thinking about and looking for resources. A few placements you might consider include:
- New hire packet. Create a one-page overview of the 401(k) plan and services your firm offers that plan sponsors can include as part of their new hire kit—a great opportunity to reach participants as they are enrolling in benefits.
- Open enrollment. Open enrollment season is a busy time for plan sponsors, but it’s also an excellent time to engage with 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. Almost all plan sponsors have some type of 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 other resources you think would be helpful. Once you get the resources in place, there is little to no maintenance required; from there, any employee engagement those materials generate is all upside.
Closing the Gap
Workers and retirees say they spend little time doing retirement planning—less time than they spend planning for the holidays. As a result, there is a significant gap between retirees’ level of confidence and their actual preparedness. By proactively promoting the value of saving, as well as working with plan sponsors to implement creative strategies to drive retirement plan participant engagement, you can expect to see a marked improvement in the overall health of the plans you manage.
Have you worked with plan sponsors to drive participant engagement? What strategies have worked for you? Please share your thoughts with us below.