The Bottom Line | Published in December 2013

Sending the Right Message

By John Manganaro | December 2013
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Benchmark Your Results

Once a subset of plan participants has been identified for a messaging campaign, there exist myriad tools and strategies to get a handle on what participants already know—from the latest data-tracking software to pencil and paper employee surveys.

The important factor is finding a way to set accurate benchmarks against which campaign progress can be planned, executed and measured, says Ben Acquario, director of communications, education and advice for Newkirk, a DST company specializing in retirement plan communications, in Albany, New York. Benchmarks of this type serve a dual function, Acquario says.

First, when set at the beginning of a campaign, benchmarks provide a sense of where the most effort and energy should be expended. Second, setting benchmarks can give plan sponsors a way to generate buy-in among executives who must approve spending on more formal internal communications. “Before you put forward any sort of strategy, you want to get a pulse on the health of a plan,” Acquario says. “We first analyze a whole list of statistics, such as participation rates, deferral rates, income replacement ratios, asset diversification rates. All of these are important.”

Pophal says she often sees a tendency to avoid this type of quantification, mainly out of clients’ fear of failing to meet predefined targets shared with company executives. Her advice is to not be so concerned over missed targets, but instead to use the results to identify and address challenges that persist for a firm or company. “I think communications folks can improve their credibility quite a bit within an organization if they’re willing to come forward with data that may not be as good as what they hoped for,” Pophal says. “The key is pitching the data in a way that shows that you’ve identified problems for the organization and that you’re the one with a solution.”

Carol Waddell, managing director and head of product and marketing at J.P. Morgan Asset Management in New York, echoes many of those sentiments. Waddell says she has seen the focus of internal communications shifting in recent years from increasing general awareness around a retirement plan to actually moving the dial on important retirement readiness metrics. These can include a plan’s average 401(k) contribution percentage, income replacement ratios and click-through rates on digital communications materials. “Obviously, retirement income is a core component of any goal of any retirement benefit, so what we do out of the gate is sit plan sponsors down and talk about their goal for generating income in the plan at the participant level,” Waddell says. “Then we identify what communications programs will enable them to plan for and pursue that success.”

Participant Profiles

J.P. Morgan encourages plan sponsors to tailor communications materials not only for general factors such as age or gender. Instead, develop a full investor profile for each plan participant that also factors in current investing behavior, asset levels and a participant’s understanding of the investment process, Waddell explains.

In the past, the development of accurate investor profiles for all participants in a large, employer-sponsored retirement plan would have been a monumental task, Waddell says. However, new technologies have radically simplified the process.

By Waddell’s account, plan sponsors that have taken advantage of J.P. Morgan’s Audience of One engagement program have seen their plan participants’ income replacement ratios grow by 35% between 2005 and this year.

“Those are the kind of figures that retirement committees get really excited about—when you can see that you’re implementing a campaign that’s actually driving the changes you want,” Waddell says.