All retirement plan sponsors, advisers, fiduciaries, recordkeepers, etc. can wholly agree: understanding financial communications and education is rarely ever a participant’s strong suit.

In an effort to find out how workers understand financial communications regarding retirement savings plans, and how participant knowledge can affect asset-allocation decisions, the TIAA Institute, in collaboration with the Pension Research Council, conducted research about how specific media communications (print vs. online, graphical vs. text), affects a worker’s comprehension of financial material.

Plan providers are using technology to move to more online and digital communications, especially as they perceive that Millennials would prefer to be communicated with in this way. Tim Slavin, senior vice president, Retirement at Broadridge Financial Solutions, says, “People want to be able to be communicated to in a way that’s easy for them. They may not want just an email and they certainly don’t want just paper. But they do want to get information that’s more meaningful to them and matters to their age group.”

The research concluded that most participants tended to skim through online material, whereas those who read written content gained a thorough, enhanced understanding.

“We were interested in how well people comprehended financial communications, specifically about retirement and particularly written communications,” says J. Wesley Hutchinson, a professor of Marketing at the Wharton School of the University of Pennsylvania, and a researcher for the report “Financial Communications and Asset Allocation Decisions: The Effects of Reading Style, Financial Knowledge, and Individual Differences.” He adds, “Knowing that the financial industry in general has massive amounts of written materials, we thought it would be a good time to examine that.”

The research was conducted in 2016, among staff at the University of Pennsylvania, Hutchinson explains. He notes participants have similar financial traits with one another i.e., all are employees of the University of Pennsylvania—where the study was directed—and each held a similar retirement plan, etc.

Interestingly, in an age where technology and social media consumes Millennials, more than half of research participants were from that generation, meaning a large fraction of Millennials responded better to print communications.

NEXT: Graphics vs. text

Utilizing eye-tracking technologies, the research examines two distinct components of financial understanding: conceptual and procedural knowledge. Conceptual knowledge centers on comprehending financial literacy and information, while the latter focuses on how participants apply financial concepts to personalized scenarios. According to the study, both types of knowledge impact asset-allocation choices nearly as strongly as factors such as risk tolerance and financial self-confidence.

“We developed measures of people’s knowledge of the traditional wisdom of asset-allocation, particularly as one gets older, and included that in the measures that we took, along with the personal decisions about asset-allocations,” says Hutchinson.

Slavin agrees that with retirement plan communications, younger participants may be encouraged to save more if they see digital, simple, graphics depicting what they could be generating by increasing contributions by even a small amount.

Hutchinson notes the inclusion of visual tables seemed to push employees away from equities in an initial experiment, as only 37% of participants ages 18 to 34, 44% of participants ages 35 to 54, and 27% of participants 55 and older chose equities when utilizing charts for information. However, a second experiment saw an overall increase. Forty-six percent of those ages 18 to 34, 52% of participants ages 35 to 54, and 33% of those ages 55 and older chose equities when employing charts for lifecycle funds/glide path information.

“Initially we thought that the effects looked like it was scaring people away from equities, making people more risk-diverse,” says Hutchinson. “But in the second study, what we found is that it just draws attention to certain things. So, in the first one, it drew attention to the risk of equities in general, and in the second one, the glide path model  drew attention to the age relevance of equities and investments.”

With sponsors and providers encouraging one another to implement online material and resources, Hutchinson warns both groups to tread carefully when it comes to participant communications, as the research found participants are seemingly less attentive when reading online content. He encourages employers and advisers to take stronger action when it comes to implementing plan communications.