[Part 1 of this two-part column is here.]
Building on what we know about what doesn’t work with financial literacy education and how adults learn (see Part 1), let’s use our imaginations to envision how financial literacy and engagement programs can work within DC plans.
Customize by Plan Sponsor
Rather than force participants to go to the record keeper’s website to get information about their DC plan, why not integrate that information within a company’s website or create one for them? Even if all that’s different is branding and location, by leveraging most of the record keeper’s tools and data, it’s more likely to be used and trusted.
Peer to Peer
If adults don’t trust experts, why not create peer-to-peer engagement on the company-branded portal? A recent Wells Fargo/Gallup poll found that 50% of younger workers use friends and family when allocating funds, compared with just 30% of those over age 50. Leveraging the company’s by age and salary data about what workers like them are doing with their DC accounts and overall benefits budgets, the company portal can use a record keeper’s entire database of participants. And rather than just providing raw data, maybe encourage better behavior by highlighting peers who are doing well or feel more confident.
A growing number of people, especially younger ones, prefer to watch rather than read. Why not create short videos by HR people and advisors about new features or messages to employees, as well as best practices? Just watch the direction of ESPN.com and you see a marked trend toward video content.
Convergence of Benefits
With more high-deductible health care plans emerging and putting even more responsibility on employees to manage their benefits budgets, should we consider integrating all benefits, including retirement — helping employees create the best benefits budget for them?
Engagement is very hard. What’s most effective is taking action for people that makes sense based on the data we have. Next most effective: Suggesting action followed by a list of steps participants can take. By using data available from the record keeper, payroll and health care systems, as well as outside sources, and leveraging the best of what robo-advisors have to offer, surely we can move the needle.
It seems we are at the beginning of some real improvements — improvements that will only happen by cooperating and by thinking creatively and, most importantly, differently. What do you think? Use the comment box below.
Opinions expressed are those of the author, and do not necessarily reflect the views of NAPA or its members.