Cerulli's August edition of The Cerulli Edge addresses ways recordkeepers can better engage retirement plan participants to improve outcomes.
An overwhelming difficulty in getting workers to actively participate in their plan is the disconnect between current and future needs. Cerulli referred to a Prudential study that found investors are apathetic about saving for retirement because they see their future selves as a stranger.
"It is difficult for consumers to relate to the person they will be, and most find it much easier to neglect this image," according to Cerulli. Furthermore, many investors won't see the payoff of saving for decades, which leads them to opt for "small rewards" like a slightly larger paycheck over retiring earlier than if they had saved more.
One way recordkeepers can overcome those biases is by tailoring communications to participants' life events and cutting back on retirement-specific communications. Instead of sending retirement information to all participants, recordkeepers should learn more about where each participant is in his or her life cycle and use that information to create "just-in-time education."
For example, Cerulli noted information about the state of the health care industry goes over the heads of many 25-year-olds, but education about reducing student debt is invaluable.
Tying in retirement information with the bigger issues participants are facing day to day can help keep retirement in perspective, according to Cerulli. Furthermore, it's what participants want. Participants of all ages said their most desired communication from their 401(k) provider was personalized life-cycle information.
