The world is undergoing a digital transformation, and everything is going digital now, including personal financial management and commerce, says TIAA’s Chief Digital Officer and CIO, Scott Blandford, who is based in Iselin, New Jersey. And, the same is true for employer-sponsored retirement plan data and communications.
The digital transformation has moved more slowly with plan providers, but it is inevitable that it will be required, Blandford tells PLANSPONSOR.
Corporate Insight Senior Retirement Analyst Andrew Way, in New York City, says, “It is important for [plan providers] to get on board because of the way industry is going right now. There are two segments of plan sponsors regarding retirement planning—one says ‘let us do all work,’ but a large and growing segment is taking the approach that they want employees to engage with the plan and realize how important it is to save and how it is on them now to save.”
One way to help people do that, Way tells PLANSPONSOR, is to provide a modern online experience, where they can see their account data, where it is going in the future, how to allocate investments properly and the importance of saving often and more. He says retirement readiness and income projection tools on websites are growing and popular. “It is important to provide participants with knowledge to take control.”
Corporate Insight follows the digital offerings of 20 retirement plan providers—19 of which are the largest providers according to assets under management (AUM) in the PLANSPONSOR Recordkeeping Survey. Four key trends Corporate Insight is seeing among the 20 retirement plan providers it tracks include:
- Increased focus on employee retirement readiness and financial wellness;
- Proliferation of responsive design;
- Emergence of comprehensive mobile and tablet apps; and
- More personalized approach to retirement planning.
According to Blandford, TIAA also offers Plan Focus, a product for plan sponsors. “We recognize that offering features and functions isn’t going to be enough, plan sponsors expect coordination of the digital tools they use,” he says. “We think sponsors will want to position plans and providers carefully, manage features of the plan directly through the portal, offer text messaging alerts, and get real time updates on key processes, reports, etc.”
TIAA has seen a 200% increase in administrator web property; it has transformed more than 100 formerly paper forms to a digital experience, and there is a 73% increase in use of some key features on the administrator website. “It helps them with adoption and utilization. They don’t need training because they know how other digital tools work,” Blandford adds. “Plan sponsors are under time and budget pressure, our digital tools save them time. They will have more time to do other things they do for their business.”NEXT: Increase in retirement plan providers’ digital offerings
Among the 20 retirement plan providers that Corporate Insight follows, all offer calculators or interactive planning tools on their websites, five offer a retirement income tool on a mobile app, three offer it on a tablet app and nine offer an optimized mobile website.
According to Corporate Insight’s survey, Satisfying Today’s Retirement Plan Participant, over the course of the past year, 12 firms have made meaningful additions or improvements to their retirement readiness tools. Eight of them, for example, added retirement readiness figures directly to homepages.
The demand for retirement income projections is clearly demonstrated by the survey data, in which Corporate Insight polled approximately 1,500 defined contribution (DC) plan participants on a myriad of digital-related retirement plan topics. Roughly 63% of all respondents answered that a retirement income projection is a feature that is either extremely important or very important to include on the participant site, and a full tool whose results include this projection was deemed extremely or very important by 65%.
A recent trend is offering tools that allow participants to input external financial information for accurate projections. But most participants didn’t want to take the time to provide inputs, Way says, so some plan providers are using an automatic import feature, in which they scrape data from their site and use that in income projections, but they also offer the ability for participants to make modifications to get a more in-depth picture. These tools make specific recommendations, such as save 2% more of salary for 90% income replacement.
Way says there has also been a proliferation of responsive design. Using the same URL, participants can log in from a phone, tablet or desktop computer, and the tool is optimized regardless of screen size. Six of the seven most recent firms to overhaul their websites have introduced this.
In addition, contribution rate management is offered by 10 firms from a mobile website, including responsive or traditional sites. Contribution rate management from a tablet is offered by six firms, and contribution rate management from a phone app is offered by 10. Providers are also offering rebalances, simple fund exchanges, contribution rate changes and requests for withdrawals or rollovers.NEXT: Offerings versus usage
Way notes that while Corporate Insight survey data shows individuals deem retirement income tools as important, many do not take advantage of their availability; only 24% of all respondents stated they viewed their retirement readiness rating or chart in the previous 12 months, and only 23% used a retirement planning tool. Just 34% of participants are very satisfied with their provider’s website.
The gap in demand and usage could be explained by participants not being aware of what is available to them for free online on their provider site, Way says. For example, in Corporate Insight’s annual Retirement Plan Monitor Awards report, Fidelity got a gold medal for online resources, but many Fidelity participants didn’t know what’s available for free. “Employers and recordkeepers need to do a better job of communicating what resources are available,” Way adds.
Meanwhile, TIAA is seeing success, with a 200% growth in use by participants of its mobile app by participants, as it makes more transactions available.
“We’ve done a couple of things to get more use. We realized a year ago that we needed to look at web and mobile not as tech projects but as online stores,” Blandford says. “We see what customers are doing, what they can’t find and making changes that day. Another thing is keeping language really simple.”
According to Blandford, on its landing page, TIAA makes tools get simple, clear billing and are easy to find. TIAA also offers outbound messaging—sending an email or text to participants that it is a great time to do a checkup.
Blandford also notes that certain digital features are popular across age groups—basic things such as “see how I’m doing” compared with people my age—but older generations are more concerned about retirement planning and how to take income. “Popularity of digital transactions depend on participants’ journey in their life,” he says.