Give Retirement Plan Participants Educational Tools They’ll Actually Use Posted by AVCU on 3:51 PM

By Rob Peters, Senior Marketing Strategist for CUNA Mutual Group.

For more information about retirement plans, including the RetireOnTarget^TM guidance system, contact Rob at 800.356.2644, ext. 7594.

Look closely at the vast array of educational tools designed to help retirement plan participants manage their plans. Websites. Interactive calculators. Brochures. Articles. Webinars. Toll-free call center numbers.

It’s pretty clear these tools rarely leave the shed. For evidence, see the results of the 2011 Retirement Confidence Survey (RCS) from the Employee Benefit Research Institute:

• When asked how workers determined the amount they needed to save for retirement, 42% said they’d guessed rather than using a systematic retirement needs calculation.
• The percentage of workers not at all confident about having enough money for a comfortable retirement grew from 22% in 2010 to 27%, the highest level since the first RCS 21 years ago.
• 56% percent report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.
• 74% say they plan to work in retirement (up from 70% in 2010).

Four steps from passive education to pro-active guidance

As our industry continues to shift from defined benefit pension plans to 401(k) plans, we should be shifting how we inform and guide plan participants.

Create a retirement plan guidance system that is:

1. Pro-active and time-free. It’s important to present guidance pro-actively to participants so they do not have to spend time and effort finding resources and plugging information into a system. The more time they must commit to getting guidance, the lower the chances are that they’ll be patient enough to actually get it. It’s how we’re wired.

2. Relevant. How many people really care about the difference between a large-cap growth stock fund and a mid-cap value fund? What most of us really want and need to know is, “Am I on track?” and “If I’m not on track, how can I get there?” Certainly, background information on funds and plan options should still be available for those who want it.

3. Visible. The most relevant information—the answer to “Am I on track?”—should be visible at a glance, every time a participant logs in to the account’s “dashboard.” Account balances, contributions, and investment returns are still necessary information. But devote the most visible real estate on the page to suggesting whether the viewer should act now or hold the course.

4. Consistent. Be consistent over time and across all channels. Say Janice sees at a glance—on printed statements, on her PC, or on her smart phone—that she’s not on track to meet her retirement savings goal. With one click, she sees the percentage she should be contributing to get back on track. The next time Janice finishes paying off a car loan or gets a raise, she might be more likely to think of increasing her contribution.

In a perfect world, we’d all seek qualified financial planning assistance to customize our defined contribution accounts according to our specific lifestyles, financial circumstances, and risk tolerances. In the real world, a small minority of employees will do exactly that. Make sure your retirement plan education program makes it easy for the majority of participants to make smart choices, too.