When asked how they feel about their retirement savings, participants today are considerably more positive, according to the 2015 Lincoln Retirement Power Participant Engagement Study.

Optimism, confidence, and excitement each grew by six percentage points over 2012: 51% of participants described themselves as optimistic and 35% feel confident about retirement savings. The percentage of participants who are anxious about retirement savings declined by 10 percentage points, to 31% of participants from 41% in 2012.

Similarly, a smaller proportion of plan participants now express concern about specific financial issues, from saving enough to retire to making good investment decisions as they age. For example, when asked about saving enough money to retire when they want to, 49% say they’re concerned, compared with 70% in 2012. Meanwhile, more participants now express optimism about those same financial issues. And fewer strongly agree that the economy makes it challenging to stay on track with retirement saving: 16% today compared with 37% in 2012.

The Lincoln “Dynamic Dozen” model maps participants to 12 profiles based on the combination of engagement level and decisionmaking style, which together drive plan-related behavior. Overall, the survey found a significant decline in engagement and a sharp rise in instinctive decisions. In the current survey, 58% of participants are less engaged, compared with 46% in 2012. Less engaged participants tend to feel optimistic about their retirement finances but also more anxious and overwhelmed. They’re more likely to rely on their employers for financial information.

Participants are less engaged in specific activities—such as checking their account balances or changing their plan contribution rates—that may be associated with market jitters. In contrast, their engagement in activities such as attending educational meetings and seeking financial advice has held steady, which suggests they still want help with the plan benefit.

While some participants may exaggerate their plan involvement, others may genuinely feel engaged simply by virtue of being a participant. In fact, 47% of participants categorized by the model as less engaged actually self-identify as engaged with the plan, further evidence that low engagement shouldn’t be confused with apathy.

Decisionmaking style is based on criteria including time needed to make plan-related decisions, sources of influence, and extent of involvement with a financial professional. Participants exhibit one of four styles:

• Advice-seekers rely on professional help and are confident;
• Fact-finders turn to numbers and research and are optimistic but anxious;
• Info-explorers strive to gather broad input, which induces information-overload anxiety; and
• Instinct-followers act quickly, confidently, and with little outside input.

Sharon Scanlon, vice president and head of customer experience, Retirement Plan Services, Lincoln Financial Group in Radnor, Pennsylvania, says she sees a lot of targeted communication aimed at Millennials that does not actually take into account their decisionmaking style. “That is too broad a net to cast,” she says.

In the current survey, 47% of participants are instinct-followers, up dramatically from 27% in 2012. Instinct-followers are the least likely group to have set financial goals. They contribute less to the plan and are the most self-critical when asked how good a job they’re doing with retirement saving.

Scanlon tells PLANADVISER instinct-followers self-report that nothing specific influences their behavior. It could be based on advice from friends or neighbors or on past experience. At the same time, if the plan matches 6% of deferrals, they defer up to 6%.

Consistent with the rise in instinct-followers, the study finds that fewer participants now respond to outside sources of influence, such as hard facts and numbers (71%, down from 86% in 2012), loss aversion (47%, down from 65%), and expert opinion (54%, down from 64%).

Of the 12 groups in the Dynamic Dozen, the one comprised of less engaged instinct-followers has increased the most since 2012 and is now the largest group. Participants in this group are known as “Adventurers.” The percentage of Adventurers has nearly doubled, rising to 32% of participants from 17% in 2012. Adventurers are focused on today, not tomorrow. They make snap decisions and move on, rarely returning to monitor the progress of their accounts.

Jamie Ohl, president, Retirement Plan Services, Lincoln Financial Group, in Radnor, Pennsylvania, says she was surprised by the demographics of that group—there were a lot of Millennials in that group, but that was not the only generation. The increase spans all ages and income levels but is most marked among Millennials, Generation X, and those with incomes less than $125,000.

Adventurers also may need the most help to set and achieve retirement goals, as indicated by the survey results: Only 38% feel they are “doing a good job saving for retirement,” and 28% say they feel confident; only 48% know their account balance, and 35% of those who receive a match contribute at a rate that exceeds it; and just 20% work with a financial professional.

While 90% of plan participants say it’s important to stay on track with their retirement saving, far fewer have set specific saving goals. Most participants (77%) have at least a rough idea of how much they intend to set aside for retirement this year, but only 36% have set a specific target. Even fewer have set goals for long-term retirement savings, retirement age, or retirement income.

By and large, instinct-followers trail the other decisionmaking types on financial goal setting. Asked their orientation toward planning, about 65% of participants strongly or somewhat agree that they’re organized planners, 65% that they’re disciplined about saving for retirement, and 66% that they’re good at setting and meeting goals. Yet most have only an informal financial plan (47%) or no plan at all (26%); a mere 17% have created a formal, written plan with the help of a financial adviser.

When participants who haven’t yet created a financial plan are asked how they would go about doing it, 35% say they would consult a financial professional. Another 19% might seek advice after doing their own online research, while 21% would develop the plan themselves using online tools.

Participants routinely juggle multiple financial goals, so it’s not surprising that they rank budgeting and managing debt, along with investing and saving, among their most-researched topics during the past year. In conducting this wide-ranging research, they’re seeking financial wellness—the ability to balance competing short-term and long-term financial needs. This broader competency enables them to make better retirement saving decisions.

Personalized retirement income projections forecast income in retirement based on current account balance and contribution rate. Some 71% of participants recall receiving one of these statements and more than two-thirds (69%) of the rest would like to see one.

The response to projections is overwhelmingly positive:

• 34% say they felt reassured that they were on track;
• 28% took steps to fine-tune their strategy, either on their own or with an adviser;
• 12% immediately increased their contribution rate;
• 26% were persuaded that they should save more but felt they couldn’t afford it now; and
• Only a small proportion of participants felt overwhelmed (8%), hopeless (6%), or confused (6%) by the information.

In-person meetings with a financial professional are by far the most effective communication vehicle for motivating plan participants to make positive changes to their retirement savings: 66% cite meetings as the most motivating, while 35% prefer calculators and worksheets and 26% favor model portfolios. Newer communication channels also are taking hold, especially among younger workers. Half of participants would be interested in greater mobile device functionality for their retirement accounts. That number rises to 61% among Millennials.

The study reveals new ways to motivate participants to take action, and ultimately, help drive better retirement outcomes.

Ohl tells PLANADVISER in-person communication is an all-weather, all-participant strategy. “Participants in the survey said in-person meetings are the best way to motivate them to make positive changes in their accounts—across all age groups and all income groups,” she says.

“We found some very actionable items that came out of survey that would help plan sponsors. They can motivate participants by making communications personal and relevant—tie it to a work/life event.

This makes participants more likely to take action and results in higher deferral rates and higher account balances,” she adds. Ohl notes that account balances were $128,000 for those who engaged in in-person communication versus $68,000 for those that did not.

The survey also showed the importance of automatic plan features, according to Ohl. Both auto-enrollment and auto-escalation help get instinct followers to do something. To engage participants when everything is automatic, Ohl says in-person communications after original enrollment result in higher account balances, deferral rates and confidence levels. She cites the experience of a large health care client that has auto-enrollment into the plan. On average, the contribution of those employees who do not meet one-on-one with a retirement consultant is 7.7%. The average contribution of a participant who has met with a retirement consultant is 9.9%.

As for tying communications to life events, Ohl gives an example of a participant whose spouse will be turning 62 soon. That is a good time to interact with the participant and make in-person guidance available.

Plan sponsors and advisers need to understand how critical their roles are, because that’s who participants are looking to for guidance, Ohl concludes.