The historic success of retirement plan participant communications and education has been spotty at best. This is especially true for the plan sponsors of small (under $5 million) and medium ($5-10 million) sized plans retirement plans. The fundamental reasons for this lack of success can be attributed to a variety of common plan sponsor communication mistakes.

• Lack if a specific participant education plan
• No understanding of the different communications needs of the participant population
• Providing predominantly technical written documentation
• Not incorporating real “lifestyle” retirement topics
• Little variety in style and format of communications

The result of such long-term communication missteps has been the creation of several significant barriers to effective retirement plan employee communications.

Participants do not read retirement plan communications

Numerous participant behavior studies indicate that the majority of retirement plan participants do not read, or even open, the employee communications materials sent to them. In fact, a recent International Foundation of Employee Benefit Plans (IFEBT) survey found this behavior to be, by far, the top challenge of benefit communications (see Benefits Communication Survey Results).

Communications fail to capture participant attention and influence their behavior.

Most retirement plan communication programs ignore the distinct generational differences in substance and style preferences. The self-perception, current circumstances and behavior response patterns of employee generations are distinct to themselves. Retirement plan communications tend to be uniform in concept and as such are typically unsatisfactory to all generations of the employee population (Baby Boomers, Generation X, and Millennials).

The emerging field of Behavioral Economics has shown that desirable retirement plan objectives, such as influencing participants to save more and invest wisely, cannot be accomplished via traditional retirement plan communications techniques and channels. The typical effort to elevate participant “financial literacy” as a means to better participant outcomes has largely failed due to general participant apathy and disinterest in learning even basic financial concepts.

Most retirement plan participants are not financially literate and have no interest in financial education

According to a Financial Industry Regulatory Authority (FINRA) study, two-thirds of Americans cannot pass a basic test of financial literacy (see Financial Capacity in the United States). Despite this relatively low level of financial literacy, almost 75% of survey respondents gave themselves high marks (5-7 on a 7 point scale) when asked to assess their own financial knowledge. Furthermore, the typical employee is unwilling to spend time the time and energy to develop a higher level of financial literacy. Even in retirement plans where financial tools, such as calculators and risk assessments, are freely available, participant utilization is typically less than 5%.

Most plan sponsors provide ineffective communications because they did not adequately research their participant audience.

The current study by the IFEBP to determine “What’s Working in Workplace Financial Education” draws several conclusions regarding this issue.

“Know your population. Organizations with successful programs survey their workers to assess both their financial well-being and which financial topics need to be covered. It is critical to have a good understanding of workers, financial challenges to build a program that addresses their needs. Organizations should also measure improvement and behavior changes after the program is in place. Those reporting success with financial education are more likely to use data to determine whether retirement plans help participants attain income replacement goals. Successful organizations also are far more likely to have assessed which financial education topics are most needed and thus more likely to recognize a variety of financial challenges facing participants.”

Without an accurate baseline of participant demographics, current participant financial status and participant self-perception and communications preferences, it is highly unlikely that a retirement plan sponsor can implement a communications program with true value for the plan participants. Thus risking employee apathy and wasted expenditures.

The OpenPlan™ employee communications process

The OpenPlan™ employee communications process is designed to surmount barriers that retirement plan sponsors may encounter in their employee communications efforts in a number of different ways.

First we initiate a comprehensive discovery process (see Plan Development) that provides us with key demographic indicators such as the “Retirement Readiness” status of current plan participants and investment patterns by different generations of plan participants.

During discovery we also conduct participant surveys to provide insight into the participant mindset. In addition to participant evaluations of current plan communication materials and methods, we solicit participant input regarding ways to improve communications and subject matter by order of importance.

Intuitive Sustained Engagement

OpenPlan™ retirement plan participant communication is based on the “Intuitive Sustained Engagement” model developed by the National Association of Retirement Plan Participants (NARPP). The goal is to present human-centric materials that both engages plan participants and informs them about how their financial decisions impact them now and in the future.

The OpenPlan™ approach is to provide personalized guidance in comprehensible components, such as:

• “Where am I now” assessments
•   “Next-best-step” analysis
• “People-like-me” comparisons

We also provide interactive guidance to help plan participants understand and leverage OpenPlan™ resources such as financial calculators, risk-tolerance assessments, goal setting models, strategy builders and action plans.