Plan participants today have access to a wealth of digital tools designed to help them manage every facet of their financial lives, from basic budgeting to long-term planning for retirement.
However there is some evidence that standalone tools and services offered to plan participants are not always fully utilized, for a variety of reasons. Some participants will not be aware of the full palette of tools and solutions made available by their plan sponsor and providers, for example, while others may feel the tools are too complicated or time-consuming to figure out on their own.
And so to push for better digital tool usage—and by extension better outcomes—retirement plan providers and their sponsor clients are moving beyond the first generation of stand-alone digital support tools and into the realm of “gamification,” wherein participants are saving for retirement in a way that considers the key lessons of behavioral finance.
Below are outlined a number of emerging strategies plan sponsors can adopt to make the most of technology and digital tools, so that participants can boost their retirement readiness.
Consider the User Experience
When it comes to participants and their usage of new planning technologies, it’s all about user experience. It only takes seconds for a person to decide if they’re going to stick with an app or not.
Speaking to PLANSPONSOR, Shane Bartling, senior retirement consultant at Willis Towers Watson, says the most effective tools “deliver very crisp, personalized experiences … We’ve seen in the last few years an appreciation for improved user experience.”
Bartling notes that these tools ”need to be honest.” They need to deliver “a message that doesn’t feel like someone is trying to sell you something.”
NEXT: Make it Social
Make it Social
Tapping into participants’ competitive nature can also go a long way to improving utilization of digital tools and resources. The ultimate goal of such “gamification” is to encourage positive behaviors by connecting people’s progress/outcomes in a clear and compelling way.
A recent survey about the topic by T. Rowe Price finds many providers are seeing success in “tapping into participants’ competitive fires,” for example by pitting different company locations or work teams against one another to see which team can achieve goals such as highest plan participation or greatest average deferral amounts.
Speaking with PLANSPONSOR, David Ray, head of institutional retirement plan sales at TIAA-CREF, says its most popular gamification tools are the ones that actively encourage competition. “The more competitive it seems the more engaged participants are,” he says. “With competition, we find 40% to 50% more clicks than others.”
Ray suggests that establishing a friendly sense of competition is not hard, but it can go a long way to influencing behaviors. The firm and its clients have seen particular success implementing calculators that generate “retirement scores” that can be compared across a workforce.
Complement Tech With Human Guidance
Technology can only go so far in boosting engagement, experts agree. Many participants still prefer human interaction to complement digital tools. According to the latest PLANSPONSOR Participant Survey, 39.1% of employees want more in-person financial education at work.
“The technology solution is a key component of a multi-pronged approach that’s necessary to be effective in this space,” says Bartling.
Often, the technological component can function as a type of first step, encouraging employees to get more engaged with their finances before eventually seeking in-person advice.
Ray says TIAA explores patterns among the different tools participants engage with. “We can see if they’re using retirement-income projection tools and whether they seek out advice after that. We find there is definitely a correlation between the two.”
NEXT: Rely on Data Analytics
Rely on Data Analytics
Plan sponsors need to track—and leverage—data about the usage of technological tools offered to participants. This data can provide useful insight about which part of the workforce needs more attention, and what kinds of communication strategies would be most effective.
Sponsors can dive into this data and segment it by age, gender and other demographics to find clues as to how to proceed and potentially boost engagement with digital tools and resources.
“We know the retirement topic in general has some of the lowest scores in terms of knowledge among employees,” Ray says. “Only 53% of the quiz questions we ask are answered correctly. Generation Y scores lower on retirement investment topics, while Boomers score lower on health and security topics. Based on that type of information, you can do targeted communication for Baby Boomers on health costs in retirement, or an educational seminar for women.”
In the end, no matter how effective digital retirement planning and financial wellness tools can be, they’re useless if not enough participants engage with them. According to the 2016 PLANSPONSOR Participant survey, only 46.3% of participants open or read paper-based plan communications. Today, plan sponsors vary on their communication strategies, but a targeted multi-media campaign could benefit all.
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