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Do You Use the ‘KISS’ Method When Communicating with Plan Participants?

When it comes to participant communications, a new white paper suggests that plan sponsors and advisors should keep in mind that some retirement plan terms have meanings that are completely out of step with the definitions most people associate with them.

In “Boosting the effectiveness of retirement plan communications,” the Empower Institute conducted three studies spanning 12 months to find out what individuals do and don’t understand when it comes to retirement-industry jargon and what preferences they have for plan communications.

While the resulting white paper doesn’t necessarily use the “keep it simple, stupid” methodology, it did find that many commonly used industry terms don’t make sense to their intended audience and can cause confusion and create barriers to confident decision-making. In addition, it observes that many industry insiders often don’t even recognize when they’re using jargon.

The paper offers several examples of how common plan terms have different common meanings, such as:


  • a contribution means a gift or donation to charity;

  • match can mean an athletic competition, dating service or something to light a fire; or

  • rollover is a trick one teaches a dog.


Perhaps more concerning, the findings show that nearly 70% of survey respondents are unclear what the term “asset allocation” means and 66% don’t understand “rebalancing investments.”

Millennials, in particular, found financial terms difficult to understand, according to the study. For example, 88% of Millennial respondents are unclear what the term “defined contribution retirement plan” stands for — compared to 76% of total respondents, which also seems high. What’s more, 63% of Millennial respondents also found the term “plan participant” to be unclear compared with 44% of total respondents.

Jargon-free Communication Goal

Empower suggests that employers and advisors can help support participants by making their retirement communications easy to understand and free from jargon, as many employees find common finance language lacks clarity. “Consider whether the terms you’re using might be considered jargon to industry outsiders and focus on simplifying language whenever possible,” the paper emphasizes.

As part of their study, the researchers showed respondents more than 20 common retirement planning concepts and asked them to select the most appropriate term for each concept from a list of terms. While there was no single term that was universally preferred for each concept, the paper explains that some general preferences did emerge.

For example, when asked what their preferred term is for the amount their employer puts into their workplace retirement account based on some or all of the amount they save, 32% of respondents selected “employer match,” compared to just 10% who selected “match” or the more verbose “funds your employer contributes to match some or all of your contribution.”

As to their preferred term for the percent of their paycheck saved in their retirement plan, 43% of respondents selected “contribution rate,” rather than “savings rate” (14%) or “deferral rate” (9%).

Survey respondents also most preferred to receive messages about their retirement plan through their personal email as opposed to their work email. In fact, 51% of respondents chose personal email as their preferred method, compared to only 26% of respondents who said their work email.

“Employees may prefer to get plan information via their personal email because that inbox is also home to their other financial communications, such as bank statements,” the report states. Moreover, it submits that receiving plan information in the same place “may make it easier for employees to think about their household finances, including retirement, in a holistic manner.”

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