As many 403(b) plans move to consolidate to a single-vendor platform, the role of education and communication is shifting. In the past, education was between vendors as they tried to win over employees, and now it is more about the plan sponsor and the employees, noted Jim Sampson of NRP Financial, Inc. “Now these education meetings are not a sales pitch,” he said. “The trend of consolidation has opened up the opportunity to focus on new education endeavors in 403(b) plans.”
There are two types of communication strategies 403(b) sponsors utilize: required and non-required. Required communication might not offer as much creative leeway. 403(b) plan sponsors are now required to send notifications of universal availability once a year, and qualified default investment alternative (QDIA) notifications must be given to people that have been defaulted annually. Suzanne Ferrari, director of Tax-Exempt Communications at Prudential Retirement, offered this tip about the QDIA communication: Even if it is handed out with the enrollment kit, keep it unbound. For instance, if the enrollment kit is in a binder, tuck the QDIA notice in separately.
The panelists mentioned the opportunity to use targeted communication strategies to reach out to different groups of participants. John Drahzal, managing director at Access Control Advantage Inc., said he uses “relevant communication” – for instance by sending a different message to 22-year-old participants than to older participants.
Sponsors and their advisers can use vendors to retrieve data to measure this type of communication, said Mark Manin, president of Cammack LaRhette Consulting. If one specific group of employees seems to have low participation, perhaps the plan sponsor needs to reach out to that particular group.
What about plans trying to educate in a multi-vendor environment? Ferrari said that just because you’re in a multi-vendor situation doesn’t mean you can’t ask your vendor to educate in a non-biased situation. She said she has sat in a room with eight different vendors and come up with a monthly schedule for education.
Ferrari also reminded the audience of the importance of top-down messaging. Employees look to authority figures, so making sure the managers have the right answers and believe in saving for retirement is one effective communication strategy.
Another low-cost way to educate employees is by leveraging the education tools of the vendor, Sampson noted. By using the Web, she said Prudential can provide a quick turnaround of customized educational materials for plans. That also helps when trying to reach targeted groups. She encouraged sponsors to help vendors understand their culture and direct them.
Overall, Drahzal summed up the three methods for reaching out to participants: meetings, direct mail, and technology. Meetings can really engage employees, but it also can tricky to get people to attend and it can be expensive. There seems to be an art to sending snail mail correctly. For instance, if participants don’t want to open an envelope, research show that post cards work.
All of the panelists talked about the future of using the Web to reach out to employees, particularly the younger generation. Drahzal noted the need to reach younger participants in a way they like to communicate. He recommended blast e-mails, which can send segmented messages. "A direct, pity message that is relevant to them will have more legs," he said.
He also offered some other ways plans are getting out there with voluntary communication by using blogs and conducting Webinars. Ferrari said Prudential offers customized Webinars for plans about general education topics. Although that works better for corporate clients, there has not been as much demand from not-for-profit clients, she said.
Mobile technology is another way to send a message, as more people are receiving information through their PDA and iPod, Manin said. Sampson suggested setting up a Facebook or Twitter account to reach participants - but some audience members reported that they are not always permitted to set up those accounts. Obviously there is a compliance concern when using the Web.
Another way the Internet might be helpful to segment is by using easy survey systems such as Survey Monkey to find out what topics participants might like to hear about, Drahzal said.
There might be fancy new tools on the Web, but direct mail is still being utilized, paired with the new digital offerings. According to Drahzal, the concept of segmentation can go so far as digital printing, such as putting a participant's picture on a statement. "The single greatest leverage you can find is the Internet," he said.
- Ellie Behling
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