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Plan Portal Design Trends Still Miss the Mark

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A recent article on WealthManagement.com explored some of the improvements to participant retirement plan portals being implemented by the big players like Fidelity and Vanguard. The article points out that plan portal design has improved vastly and how the types of data available, how it is presented, and the options given to participants are improving. Gone are the days of providing only the account balances and investment options, now participants can see nifty graphics, input goals and see how different scenarios might affect their retirement.

While I don’t dispute that these features can be of some benefit to participants, what this article fails to point out, at least directly, is that flashy plan portals are not actually making a big difference in participant outcomes. The reason they are ineffective is that many participants never even sign into the portal, let alone use it to manage their deferrals or asset allocation.

Lauren Valente, head of Participant Experience and Recordkeeping Services for the Vanguard Institutional Investor Group, says in the article that more than half of Vanguard’s 4.4 million participants have logged into the portal in 2017. That means nearly half of the participants have not! Let’s not forget that we are only talking about participants who logged in, the article does not list any statistics about participants who actually logged in and then also increased their contributions or completed a plan rollover. I suspect that these missing statistics would be miserably low.

The fact of the matter, and what I hear repeatedly from the plan advisors I talk to, is that the passive approach to participant education doesn’t work. Advisors who rely on the plan portal to deliver the education and provide the advice are not going to improve the outcomes for their participants. This is really a disservice to the participants and the plan sponsor.

Participants Prefer Paper

How can advisors more effectively engage participants? One method is to change the medium of information. Despite the breathtaking innovations in technology, people still prefer to receive some types of information on paper. In 2012 the AARP commissioned a study of retirement plan participants that found and overwhelming majority prefer receiving retirement information in paper versus online. Some key findings were:

  • If required to choose between paper or online, 75% of those surveyed (including younger participants) would choose paper
  • 70% said they would be more likely to read a paper communication
  • 74% said that plan sponsors should be required to send all commutations in paper format

Additional research also indicates neurological advantages to using paper statements. In 2015, the U.S. Postal Service conducted a study in conjunction with Temple University comparing brain activity in relation to digital versus print advertising. The survey found that those who looked at print ads had a stronger emotional response and memory of the content. Those who viewed print ads also displayed a greater value for and desire of the product or service. All this suggests that plan participants who are given a paper statement are more likely to engage emotionally with the content and remember and value the content. This is exactly the response advisors want from their materials!

Content Matters

However, it’s not just the medium of paper that is important but the content being presented. An advisor handing out paper reports with generic plan information will still face an uphill battle getting participants to engage and increase deferrals. This is because this type of generic plan information, even distributed on paper, does not connect with the participants. The content needs to be personal otherwise it is just another boring piece of paper that they will recycle or file away when they get home.

Paper reports that present personalized education that is meaningful and understood by the participant is key. This is the active approach that takes advantage of participants’ preference for paper. An advisor arrives at the participant meeting armed with reports that will show each participant whether they are on track for retirement. If they are not on track, these reports should give them suggestions to improve their situation and show them exactly how this will affect their paycheck. Participants process this information with the advisor right in the room so if they have questions or want to make a change the advisor can help facilitate it.

Advisors using this approach are seeing plan participation rates between 80-95%! Participants are tripling their deferrals and the advisors are doubling their AUM! How do I know? I know because these advisors are using our participant gap reports to do it.

Don’t rely on a plan portal to educate and engage your participants, it doesn’t work. If you’re looking for better ways to engage your participants, go with paper. Better yet, use Retire Ready Solutions participant reports to take your participant engagement to the next level.

This entry was posted in 401(K) Participant Education, Retirement Readiness by Edward Dressel
    

Trust Builders, Inc. has a long history of working with corporate accounts of all sizes. Trust Builders, Inc. will draw on our experience to help your advisors increase their sales through client education.

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