The study, “Inside Retirement Advice 2013: Accumulator Focus, Acquiring and Growing Relationships in the Workplace, Online and with Advice and Guidance,” found retirement services firms have traditionally targeted those between ages 35 and 44. When it comes to employees that are between 21 and 35 years old, “Three-quarters of firms agree that they need to do something different for younger investors,” said Chris J. Brown, principal, Hearts & Wallets.
According to the study, only 16% of resources are devoted by these firms to seeking out younger employees/investors. Similarly, only eight percent of firms operate with a focus towards this younger group.
Because few of these younger employees are strongly planning for or interested in retirement, Brown said, retirement services firms need to “speak the language of younger investors.” Most of those surveyed for the study (90%) agree these younger employees “demand more immediate and varied ways to communicate, access and validate” plan-related information and that “the industry will have to adapt.”
Rather than the more traditional approaches of television advertisements and seminars, the study recommended firms look at more current avenues of communication such as social media, online ads, e-mail, Twitter and similar outlets.
The study also found that retirement services firms and plan sponsors need to be more thorough in the information contained within plan enrollment materials provided to employees. For example, in a review of 13 such enrollment kits, the study found:
- More than one-third failed to mention employer matching contributions and tax deferral, both compelling reasons for plan participation;
- Only 38% mentioned anything about Social Security; and
- Fewer than one-third mentioned retirement income sources other than 401(k) or 403(b) plans, or included a rollover application or beneficiary designation form.
“There’s considerable room for improvement in how firms move Accumulators through choices at work, outside work and the overall advice/guidance experience,” said Brown, who pointed out new firms that address these improvements will force existing companies in the industry to change how they do business.
The study used the term “Accumulator” to describe those employees that are younger than age 64 and not within five years of retirement. This group makes up 77 million households with $15.4 trillion in investable assets, according to Hearts & Wallets research. More information on the study can be found here.
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