Personalization and the DC System

A typical platform might use age and salary to generate investment recommendations. What additional factors could lead to more customized solutions?

Technology and social media increasingly blur the lines between work and home, personal and professional and employers will need to be mindful of the implications of this when creating and communicating benefits programs. Specifically, defined contribution plan sponsors will need to stay abreast of rapidly evolving trends and developments in the personalization space in order to keep their plans tailored, relevant and appealing.


Conversations about personalization are frequently tied to the growing focus on retirement income and rethinking investment menus to account for both the earning/accumulation and spending/decumulation phases of life. An announcement from PIMCO about its annual consultant survey notes, “A generational shift in how Americans plan for retirement is creating demand for a more dynamic approach to saving and technological advances have made solutions tailored to plan participants’ specific circumstances much more accessible to the broader public.”


Plans may want to consider taking a fresh look at their investment lineup through the customization lens and discuss it with their investment consultant or adviser and recordkeeper. Are the offerings appropriate for the workforce demographics and any stated goal of keeping retiree assets in plan? Are there new ways that the investment menu might be updated or structured to consider additional personalization factors? How are current target-date fund and/or managed account offerings allowing for engagement and personalization, and how might these evolve?


A typical platform might use age and salary to generate investment recommendations. However, additional factors that could lead to more customized solutions include:

  • Marital status;
  • Gender;
  • Number of dependents;
  • Health status;
  • Homeownership;
  • Debt, including types of debt such as credit cards and student loans;
  • Access to a pension (self or spouse);
  • Other liquid and illiquid assets;
  • Any expected inheritance(s);
  • Insurance coverage, including health, life, long-term care and disability insurance;
  • Expected retirement age, if known; and
  • Other workplace savings (e.g., HSAs, emergency savings).


As a holistic financial wellness approach increasingly takes hold in how benefits are structured and communicated, this approach can inform and gain from personalization features that customize both the content offerings and the manner in which information is delivered to individuals.


The rising demand for personalized data, experiences and programs stems in part from a society that is increasingly responsive to personal tastes and preferences based on demographic data and previous interactions with apps and websites. Think of the suggestions that appear without prompting on TV streaming services or the recommendations that pop up in shopping apps. Individuals are increasingly expecting this type of experience across the board, not just for entertainment but also for their finances and in their workplace. Tailored content and delivery may have the added benefit of keeping people engaged even as attention spans become ever shorter, and could also help combat the known phenomenon of decision paralysis, which can occur when people are presented with too many choices or demands.


While plan sponsors may not have the resources to dedicate to personalization that Amazon does, they can start having conversations about it internally and with their service providers. This may require breaking down internal silos and involving members of not only human resources and finance but also IT, communications and the diversity, equity and inclusion team in these discussions.


Some questions to consider might include:

  • What feedback have we had on our retirement plan in the past in terms of user experience and how can it inform the path forward?
  • What data do we have about what our workers need and how and where they are currently accessing plan information?
  • What are our service providers and similarly sized plans offering, considering and seeing related to benefits personalization?
  • What do our workforce projections look like for the coming five to 10 years?
  • How might this planning tie into our strategy for broad offerings such as emergency and college savings programs?


The key is to not wait until a perfect solution emerges. Rather, start embedding customization options where possible and aligning them with goals and overall strategy. For an organization committed to boosting its equity and inclusion practices, this might be as straightforward as starting with offering plan information in multiple languages, ensuring that sites and apps used to communicate meet accessibility best practices and ensuring that plan and benefits websites are mobile-responsive so employees can have an optimal user experience whether at a computer or on a cell phone.


An ecosystem of trust built on transparency and clear goals and processes must underpin this evolution. Participants must trust those to whom they are providing personal information, those who are selecting and managing the investment offerings in their retirement plan and those who may be offering them advice. Plan sponsors must trust the cybersecurity protocols and data security oversight of their recordkeeper and the recommendations and insights of their investment consultants and advisers.


The Defined Contribution Institutional Investment Association Retirement Research Center is actively exploring personalization as one of its focus areas for this year, considering the intersections of generational and DEI focuses and the question, “How can personalization lead to greater financial wellness?” We look forward to sharing our findings with plan sponsors and the broader industry.


Pam Hess, Chartered Financial Analyst, is vice president of research and member engagement at DCIIA RRC.

This feature is to provide general information only, does not constitute legal or tax advice and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of Institutional Shareholder Services Inc. (ISS) or its affiliates.