What Can Be Done?
Providers have a handle on targeting age groups in their materials,
which retirement plan advisers can utilize to offer more high-touch
service to plan sponsors and participants. Participants of all
generations are beginning to communicate in different ways, and younger
participants crave venues of communication beyond the traditional
enrollment meeting.
Actually, it could present a challenge for advisers to get across
retirement information when there is so much multidimensional
information to compete with, Sujansky notes. That means it is
imperative not to be boring. “This is a group that likes to be
entertained,” she says. In-person communication, when available, is
still a powerful tool. “Individualized one-on-one education is still
very relevant to anyone of all generations,” Kronmiller says.
The people put in front of younger participants could also make a
difference, Chepenik says. At his firm, they have a couple of advisers
in their mid-20s. “It’s nice to have somebody in that room that they
can connect with.”
Tweeting Retirement?
Providers and advisers are looking for new ways to communicate with
participants, particularly those in the younger bracket. Using social
networking tools, such as blogs, Twitter, and LinkedIn, could become
more of the norm, Drahzal says. “Obviously, there are issues from a
compliance perspective around these—but every one of those challenges
can be beat.”
Providers and advisers already are using the Web by offering
educational Webinars or newsletters (see “Spinning the Web,”
PLANADVISER, May-June).
Social networking has been suggested by some as an educational tool to
pique interest in retirement and finance. While it might not have
caught on at many financial firms just yet, some providers are trying
to incorporate more tech-savvy tools, Kronmiller says. Principal is
using text messaging and working on an iGoogle gadget, a widget that
can sit on an individual’s personalized Google home page.
Principal also offers materials by “life stages.” Similarly, New York
Life offers a campaign that targets eight groups based both on age and
behavior. As part of a campaign to reach Millennials at a large
employer client, Prudential gave participants a seed on biodegradable
paper to plant a seed for good retirement. Morey notes that it blends
multiple messages: simplicity, environmental consciousness, and the
value of starting savings early. She says Prudential also has used
direct mail campaigns using different language to target by both gender
and age, which resulted in higher rates of enrollment and deferrals,
specifically in the Millennial group of women (17.3% increase in
enrollment after receiving a targeted message).
Using the provider is helpful to lasso whatever targeted communication
and bells and whistles they come up with; it also is helpful to use the
provider to get data about the plan that can be taken to the plan
sponsor to show which age groups might need focus. “Advisers and plan
sponsors should use us for the data that we have,” Garen says. Then,
they can see whether a group or subset shows low deferral or enrollment.
As with any educational endeavor, going through the plan sponsor is the
first step in reaching those in Generation Y. Chepenik notes that
counseling plan sponsors about plan design can make a difference in
helping younger participants save for retirement, such as lowering the
eligibility or offering a match.
The key is to convince young people to get invested somehow—even if it
is just a 1% or 2% contribution—so they do not miss critical
accumulation years, says Todd Lacey, Managing Partner at The (k)larity
Group, an NRP member firm in Athens, Georgia. While some participants
might have high-interest credit cards they might need to pay off first,
Lacey says it is better to convince many participants to save something
than nothing at all—or else they will not go back to the 401(k).
“That’s why auto-enrollment works so well,” he says.
The message seems more critical now than ever, as the current market
turmoil might have shaken the already-conservative younger investor.
The financial downturn presents an opportunity for younger investors,
which makes education about the value of long-term savings more
important, Ruggie says. “They’re the ones that not only have the most
to gain by taking advantage of a down market, but also, to some extent,
have the most to lose by not doing so,” he says.
See also: Audio Interview with Jason Chepenik