Employee engagement is important to ensuring the success of any retirement program. But how do you encourage employees to plan and save?
To start, it’s important to understand how employees make decisions. Lincoln Financial Group’s, Participant Engagement Study, found four decision-making styles based on 1) the time participants need in order to make a decision in the plan; 2) whether and how participants involve a financial professional; and 3) what participants say influences their decision.
The advice-seeker – a proactive individual who makes use of available resources, works with a financial professional, saves outside of the retirement plan, and is the most optimistic and confident.
The fact-finder – an individual influenced by the facts and numbers, prefers model portfolios, seeks opinions through research rather than personal advice, and feels both optimistic and anxious.
The decision-avoider – despite consulting a wide-variety of sources, this person fears losing money, takes a lot of time making decisions, and is anxious, overwhelmed and scared about the future.
The instinct-follower – an independent individual who doesn’t consult or rely on outside information or opinion, yet feels optimistic and confident about the future.
When you understand how employees make decisions, you can create an engagement strategy that motivates employees to take action.
Create an engagement strategy for all employee segments. Your strategy must appeal to all decision-making styles, it may be a good idea to consider special strategies for disengaged participants, instinct-followers, and decision-avoiders in particular. These groups represent the greatest area of opportunity.
Employees who are disengaged may be more easily motivated by taking one simple step, such as checking their account balances or meeting the employer’s match. For those who have difficulty making decision or those who rely on their own instincts, invite them to speak with a financial professional. And for engaged fact-finders, provide them with the resources to conduct their own research, such as the plan provider’s website and newsletters.
Optimize plan design to accommodate everyone. Enrolling in the plan, deciding how much to save, and selecting investments are difficult decisions and can be real barriers. To overcome these barriers, consider automatic features, such as auto enroll and auto escalate, as well as streamlined investment solutions (e.g., target-date funds, managed accounts, and automatic retirement income options).
Offer in-person guidance and personalization. Some participants want to be able to interact with a person who is qualified and knowledgeable about retirement planning. A personal approach can help participants address the most personal and influential factors of retirement planning.
Deliver outcomes-focused communication to motivate action. Most employees want to know about what simple actions they may want to take today and what outcome might be expected at retirement, as opposed to the mechanics of how investment or asset classes work.
Employees have mixed emotions about retirement, which affects how individuals engage with their retirement plans and how they make retirement-related decisions. Employers, in partnership with their retirement plan service provider, should use what they know about their particular employee population to develop a strategy that reaches out and engages all their employees.