“Times are tough, and many Americans are struggling to make ends meet,” Chris Augelli, vice president of product marketing and business development at ADP Retirement Services, told PLANSPONSOR. “And the list of demands on their financial resources is long: paying the mortgage, health care expenses, month-to-month bills, keeping up with rising energy costs, child care and saving for your child’s education. The list goes on and on.”
As a result of competing financial goals and obligations, a seemingly distant event such as retirement can often end up at the bottom of the list.
The second barrier to retirement saving is ineffective communication and education. Americans understand they need to save more for retirement, but are frequently unsure how to go about achieving that goal. “Engaging employees in meaningful conversations about their retirement readiness is critical in spurring them to take the appropriate actions to improve their personal retirement outcomes, which also achieves the reciprocal goal of creating more satisfied and productive employees in the workplace,” Augelli said.
In 2011, ADP commissioned Chatham Partners to conduct a follow-up study about employee education, which found that plan participation increased sharply following an employee education enrollment meeting. The results indicated on average a 19% boost in participation rates for plans that held a meeting after moving their 401(k) program to ADP.
For most plan sponsors, it is challenging to find useful content and the time in which to educate employees about it. The key to overcoming those barriers is leveraging the expertise and resources of their retirement provider and their financial adviser, Augelli said.
Education should not be approached as a one-size-fits-all solution. Plan sponsors and advisers should keep in mind that people learn in different ways, and what may be effective for one person could be ineffective for someone else.
The effectiveness of education also depends on the generation of the audience being addressed, Augelli added. Research from the Enterprise Council on Small Business (ECSB) finds that younger people in Generation X and Generation Y prefer online or mobile access to interactive educational tools. Older employees, on the other hand, prefer to receive information more directly from mail, email or in-person meetings.
“At the end of the day, the effectiveness comes down to the key to any successful presentation—know your audience,” Augelli said.
In recognition of National Retirement Savings Week, October 21 to 27, ADP created a video that draws attention to the important issue of retirement saving. The video, which provides tips about how employers and employees can improve their retirement plans and personal retirement readiness, can be found here.
This year, the company has a campaign called Route 401k that provides communication centered around a retirement action plan to help employees get on track for accumulating adequate savings. The campaign includes information for each age group and their corresponding retirement goals.
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