PD08: Actions Oriented: Innovative Ways to Motivate Participants

Thinking about retirement - from finding a plan to determining a deferral rate - can be daunting for those unfamiliar with the process.

During PLANSPONSOR ‘s 2008 Plan Designs Conference in Chicago, discussion panel members moderated by Alison Cooke, Managing Editor of planadviser , discussed the various challenges smaller retirement programs have faced, and the tricks they have employed to motivate even the most reluctant participants.

align=”center”> The Panel Audio File

Janet Ganong, a consultant with RBC Dain Wealth Management, believes that even more difficult than getting people to enroll in a plan is keeping them engaged after they have taken that first step, noting that most have a “set it and forget it” mentality.

If someone is unable or unwilling to consider the necessity of planning for their future and is afraid of making a bad decision, she says, they might try to avoid making any decisions at all. According to Ganong, it is important for advisers to “remove the fear” and walk participants through their enrollment. By making this first step accessible, she said advisers can build a sense of trust with participants that will benefit both parties as they continue to prepare for retirement.

“Tough Love”

Stace Hilbrant, Investment Advisor Representative and Managing Director of 401(k) Advisors, believes in more of a “tough love” approach, claiming that, “if you want to get them engaged in planning for retirement, they have to be scared to death.” If they want to have enough money to last for 20or 30 years after they retire, they have to be willing to defer a certain amount while they are still working, she said.

Ganong recommends making participants do the math: if they want to eat three meals a day for the next 20 years-assuming each meal costs about five dollars-that adds up to about $110,000. If they are married-and want their spouse to be able to eat as well-that cost doubles. Showing how much they will need just to feed themselves for so long, says Ganong, can motivate them to take action, and that is when advisers can help them make the right decisions.

If participants are still not sufficiently motivated, Ganong has a more creative suggestion: bring a can of cat food to meetings. When asked why she has it, she tells participants that more cat food is sold in Florida, than there are cats to eat it. Remembering that new employees have likely been unemployed recently, Ganong describes retirement as either “your longest stretch of unemployment or your longest vacation.”

Panelists agreed that it cannot be stressed enough how important continuing education is-for new participants as well as those that have been enrolled in a plan for several years and might need to rethink their needs and strategies.

"Four, five, six percent's not getting it," says Hilbrant. Unfortunately, Cheryl Orr, Assistant Director of Human Resources at Fairfax County Government, has known many people who do not defer even a full 1%, but maybe only ten or 20 dollars a month.

When participants are more concerned with current expenses-the rising cost of gas or their child's tuition-you have to be sensitive to their concerns, but the savings message is no less important, she says.

One way to be sure employees stay aware is to offer information sessions, even during work hours if necessary. While it can be difficult to convince employees to come to meetings they might consider unnecessary, especially during the work day, Ganong shared the experience of a plan sponsor she knew who, "told a few key people that he, as the controller, was going to be handing out money at this meeting."

The rumor spread around the office, and before the meeting, he handed every person that came to the conference room $1. Ganong explained that, "They had about 99% participation in those meetings that were not mandatory."

Another time, she handed everyone who spoke or asked a question a small toy, like a bouncy ball. Cooke pointed out that these little giveaways can be more rewarding and less expensive than the more standard practice of offering free food.

Segmenting by Age

When advisers plan an education session, while there are certainly basic facts that apply to all employees, Orr recommends segmenting meetings according to age, department, time at the company, or racial background, so advisers can deliver data as it applies to those specific groups in a way they will be able to understand.

If a workforce has only limited English capabilities, having relevant materials printed in their native language along with a speaker fluent in that language to convey ideas that are not easily translated, can have a huge impact.

Similarly, younger employees will also have different concerns than those raising families or those nearing their retirement.

Orr says she believes in reinforcing the savings message by sending it out as often, and in as many ways, as possible: through emails, by sending representatives to different departments, and by putting it on pay stubs. Hilbrant suggests having older, more experienced workers present during meetings. "They're always coaching the younger people, saying 'You're a fool if you don't put away 15%,' and that's the greatest coaching in the world," he says.

For plan advisers to help participants achieve a successful retirement, they have to educate everyone about the decision making process, stress to sponsors the benefits of having an adequate plan, appeal to a variety of age groups and cultural backgrounds, and especially make themselves available for any questions or concerns that arise.

Finding a retirement plan and being willing to make the right decisions is not easy, but as Ganong says, "We are here to help them get there, with a little fear thrown in."

- Sara Kelly