Plan design enhancements, such as the implementation of
automatic enrollment and automatic escalation features, have gone a long way
toward improving participation in defined contribution (DC) plans. But plan
sponsors may find themselves surprised by the lack of reaction from
participants when they implement much-discussed changes such as the addition of
auto-features, streamlining menus and other best practices.
While this lack of engagement
can prove beneficial when plan sponsors are seeking to evolve and overcome
participant inertia to better ensure optimal retirement outcomes, it can also
prove disheartening when they’re trying to get participants more actively
involved with planning and saving for retirement through their DC plan. Plan
sponsors can boost participant engagement by using effective communication
strategies.
Communicate and
contextualize: When sharing information with participants, use clear,
concise communications that also provide context. Don’t assume that they will
“fill in the blanks” and draw conclusions as to what they need to do and how it
could benefit them—provide specific, actionable information. Where possible,
contextualize the information in light of their other benefits, their overall
budget and financial wellness profile. Spell out the “What?” “When?” and “Why?”
of the information you’re sharing.
Tailor your
messaging: People are now used to customized experiences—on-demand
streaming and “you might like this” preferences served up everywhere from
Amazon to YouTube, and more. Where possible, provide unique messages to
different demographic segments within your participant population. Supply easy
ways to click through to more information, such as retirement calculators and
other tools, as well as their unique DC plan information. If possible, track
those clicks for metrics that might shed light on the success rate of the
communication. (For a deeper dive, see “Successful Plan Communications for
Various Population Segments” by the ERISA Advisory Council.)
Leverage
technology: Take a fresh look at the latest tools available to support
participant engagement and communication. There’s more out there than just
email and a website. Can you create an explainer video? Does your recordkeeper
have technology you can leverage? Is text-based messaging a possibility? Can
you use gamification, artificial intelligence (AI), or other innovations to be
more effective and capture the attention of your younger participants?
Plain English,
please—and perhaps some translations, too: It’s not breaking news that most
employees are not investment savvy, and communicators have long argued for
“plain English” information about benefits and retirement plans—and yet if you
reviewed recent examples of participant communications, more than a few would
still be riddled with investment jargon, complicated charts and generally
dense, visually unappealing content. Take a good look at what information your
participants are receiving about their plan and consider whether the average
employee will really understand it—or even want to attempt to try. Given your
employee demographics, you may want to consider offering information in
multiple languages, as well. (This tip and many other best practices are
discussed in DCIIA’s white paper, “Rethinking Defined Contribution
Communication and Education.” In a forthcoming paper, DCIIA member contributors
will share insights on bolstering participant engagement and best practices in
communication when rolling out a retirement tier/retirement income solution.)
Consider
partnering with employee/business resource groups: Collaborating with
employee affinity groups might help to boost engagement. They could, for
example, review and provide feedback on your participant communication
materials or create spaces for candid conversations where employees might feel
more able to share questions and concerns and learn from each other. Peer-based
discussion and accountability can be a strong motivator for positive behavior
when it comes to finances and savings.
Be inspired by
social media and leverage internal communications pros: Can you recruit
internal “influencers” who might amplify important messages about retirement
savings and your DC plan? Do you have an internal discussion platform where you
might encourage employees to share their thoughts, updates and questions on the
plan in an open forum? Can you partner with your internal communications team
on a targeted campaign, perhaps creating hashtags, providing images employees
can share and offering prizes for participating in the campaign?
In his “Behavioral
Bites” blog, DCIIA Retirement Research Center Director Warren Cormier notes,
“We hear a great deal about fostering engagement among participants when it
comes to retirement savings. However, with today’s prevalence of automated
features, does engagement still matter? The answer is ‘yes!’ In our models, we
have found that people who are highly engaged in activities surrounding their
retirement account have much higher deferral rates and are much more likely to
trust and heed the communications messages from their recordkeeper and
employer. Perhaps most importantly, engagement drives what we call ‘financial
courage’—the strength to stick to their retirement journey regardless of what
happens to the market or to their personal situation. Essentially, engagement
creates a much higher probability of retirement readiness.”
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