One of the biggest challenges retirement plan sponsors face is how to effectively communicate with participants and keep their attention. And in today’s virtual world, it’s more challenging than ever. In this episode of Plan Talk, Retirement Director Ben Rizzuto outlines several ideas for interacting with participants to help them stay engaged with their retirement plans.
Ben Rizzuto: Hi, I’m Ben Rizzuto, and you’re listening to Plan Talk, part of Knowledge Labs from Janus Henderson Investors.
Last year we did an episode about how to better listen to participants within your retirement plan. We talked about lessons we can learn from focus groups and how data can allow us a glimpse into the minds of participants to see what they are worried about.
This year I’d like to talk about communicating with participants. More specifically, how can we better communicate with participants to better ensure that we have their attention and are more engaged with the retirement plan.
In my position, I’m lucky enough to be able to give a lot of presentations to people about retirement issues. Before the pandemic, I’d travel around the country to present to people. I’ve done these presentations in office conference rooms, restaurants and hotel ballrooms. Over the past year, I’ve done these on virtual meeting platforms like Zoom or WebEx or Teams. Whether it’s in person or virtual, during those presentations I sometimes notice that someone in the audience isn’t as attentive as I’d like. They may be looking at their phone or reading the newspaper. They may have turned off their video camera, they may be playing with their hair, talking with someone else, or even dozing off. I always try to make these presentations as engaging as possible but sometimes these lapses in attention occur.
And that is an idea that we’ll talk a lot about here, is attention. There are all sorts of ways that I or others who are giving presentations will attempt to keep people attentive. Moving around a room, changing the volume and tempo of your voice, jokes, interactive things like polls or showing videos … anything to change it up a bit to keep your audiences engaged. With so much information and media out there today, this can be hard, and this is the reason that, these days, having people’s attention may be the only thing worth having.
So, what can you do about it? How can we better communicate with participants to make sure we have their attention?
Let’s start by thinking about rewards.
At many companies, there is a system in place that recognizes employees as they reach certain milestones of service. Maybe it’s every five years and a small reward is provided when those milestones are reached. It could be extra compensation, some sort of company-branded piece of merchandise, a gift card or the classic gold watch.
Just as an aside, the whole gold watch tradition started in the 1940s at The Pepsi Company, when after working at the company for decades, they would reward someone with an 18-karat gold watch, signifying that “you gave us your time, now we are going to give you ours.”
There are several reasons why companies put these reward systems in place. First, and in line with the gold watch idea, companies want people to have long careers. Second, these rewards serve as an enticement for extended service. Very simply put, if you do this, I’ll give you something …. or you scratch my back, I’ll scratch yours. Third and finally, I think this is another piece of the puzzle that companies put together to create a culture that says, “we care about our employees.”
Other pieces of this puzzle could be things like diversity, education programs, charity or community outreach.
The retirement plan is part of that culture, too. But could we do more to communicate around this benefit? We reward people after they reach 5 or 10 years of service; why not reward them after they have increased their deferral rate, reached specific deferral percentages, or even simply rebalanced their portfolio?
Many might be saying, “We already match deferrals up to a certain percentage, now you’re telling me to give them something else?” The quote unquote “reward” may not need to be monetary. Remember how important simple acknowledgement is for humans. We all want to be seen, heard and valued. And we all want to hear that the work we’re doing, the actions we’re taking, are good. So, when a participant logs on to the 401k platform and increases their deferral percentage, acknowledge it. Make it a call from their manager or from someone in HR, an automated email, or even a handwritten note. Do it when someone actively makes a positive change or even after the auto escalation program increases their deferral percentage. These little acknowledgments can help people feel better about what they’re doing, especially when it comes to the often nebulous and distant subject of retirement.
When you choose to reach out is up to you. In fact, it may even be better to just do it when you can. This introduces the idea of variable rewards. Rather than using conventional feedback loops where, to put it simply, I do this and that will happen, variable rewards are just that variable. I take an action and I might receive a reward, but I might not. What’s interesting is that these variable rewards help to focus attention, provide pleasure and actually infatuate the mind.
In fact, American psychologist B.F. Skinner described how the variable reward model works in the 1950s. Skinner observed that lab mice responded most voraciously to random rewards. In the study, mice would press a lever and sometimes they’d get a small treat, other times a large treat, and other times nothing at all. Unlike the mice that received the same treat every time, the mice that received variable rewards seemed to press the lever compulsively.
This is one of the reasons that platforms like Instagram, Facebook, Twitter, and even apps like Tinder are all so popular and we spend so much time on them. They all use variable rewards to keep us scrolling, swiping and overall engaged. The same can be done with a retirement plan.
Now, I don’t think we need to completely gamify the retirement plan experience. We’ve seen apps like Robinhood, which uses rewards and visual cues gets users to trade on its platform, but I think using these ideas in our communication around and with participants within the retirement plan might just help get people a little more engaged.
Think about it. How nice is it to get a call from a friend or a letter in the mail out of the blue? By simply reaching out to participants after they’ve taken part in a positive action, we can keep them better engaged and acknowledge what they’ve done. This can also lead to some great touch points to have conversations around questions a participant might have or bring up other benefits available to them.
Variably reaching out to participants and acknowledging their good behaviors is one way to keep them engaged, but sometimes when we call sometimes folks aren’t going to pick up. We may have to leave a voicemail. So how can we increase the probability that they’ll pick up? Are there better times to communicate with participants?
There are also a couple of ideas that I think are noteworthy regarding when we communicate with participants. These two stories were highlighted in our most recent Top DC Trends and Developments guide and come from Pensions & Investment’s most recent Excellence and Innovation Awards.
One story is from New York City Health + Hospital, which won the award for the way they changed their communication and counseling strategy for their employees.
This is the largest health provider in the country, so they have onsite retirement counselors that meet with employees and talk about their plan and the best way to take advantage of the plan. But like everything else over the past year, that communication had to shift to virtual. Interestingly, what they found is that there are a whole lot of advantages to going virtual.
One of the biggest advantages that they found was for those who worked overnight. Who are they going to meet with at 3:00 in the morning? Certainly not the retirement counselors. It's a lot easier to accommodate different shifts when you do things virtually. Along with that, it's unlikely for the spouse to come to meet in-person with the retirement counselor because they’re busy with their own work. Again, when it's virtual, it's a lot easier to draw in the spouse, and when it comes to money matters, collaboration among couples tends to be a best practice. Overall, this allowed the system to reach a broader swath of its participant base.
This is something that hit home for me since my wife is a nurse, and early in her career right after we had our daughter, she would work overnight at one of Denver’s hospitals. This allowed me to stay home with our daughter and her to be home during the day. Many of us don’t think about it, but there are a whole lot of people that don’t work 9 to 5, and just because those folks don’t work quote unquote normal hours doesn’t mean that they don’t have questions about how to save more or take full advantage of the retirement plan.
That is the beauty of the virtual meeting. We are able to touch a lot of people in a lot of places at a lot of different times, and even if it is at 3:00 in the morning, we can do it from the comfort of our homes probably in our PJs if need be.
Along with this I’ve seen other stories of plan advisors going out to meet face to face with participants who many not work in a normal office setting. Maybe this means actually going on into the field with employees to meet with them where they work. I remember a story about a Wisconsin mining company we highlighted in 2019 whose plan advisors would go out and do on-site participant education at the company’s mines or sand-processing facilities. Overall, we need to think about when folks are working and where they are working in order to make sure we have their attention.
Communicating at the right time, whether it’s 10am or 10pm, really speaks to the idea of having someone’s attention. That being said, it’s important to leverage periods of time or events where you know people are already going to be engaged.
One of the first times we do this is right after someone starts working for a company. Everyone goes through an orientation of some kind where they go through a veritable gauntlet of meetings with managers, coworkers, and benefits and HR folks. And during that time, we hope that at least some of that information sticks with these new hires.
Another period where engagement is high for employees and one where we might consider talking more about the retirement plan is during open enrollment. Think about it, this is the period of the year when every single employee is making decisions about their health benefits for the next year.
Employees during this period are making decisions about what health plan to use, how much money to put into their flexible spending and dependent care accounts, and other financial decisions around insurance and disability. Now, your benefits guide may include a page on the retirement plan, which is always a good reminder, but another interesting idea comes from the City of Austin. Like many municipalities, the city sponsors a 457 plan, and like many plans run by public entities, the city can’t utilize auto enrollment due to state law. So, engagement was lacking.
Well, they did something that's extraordinarily simple yet powerful. During the city’s open enrollment period, a period as we know which is typically reserved for things such as health insurance, dental insurance, vision, and disability insurance, the city collaborated with their other benefits providers and included the 457 plan as part of that open-enrolment period. In fact, they added a tab on the site where folks would sign up for health benefits for the retirement plan.
Why not? At that time people are attuned to what's happening relative to their benefits, so it's a great opportunity to reach them and not only did they take advantage of that window, but they also saw some pretty good results. The participation rate in the plan increased 5%, and among those who were already participating, 12% increased their deferrals. Remember, this is a plan with no auto-enrolment and no match, so these are pretty good results given the simplicity of this tactic.
The great thing about all of these ideas is that they are relatively easy to implement and don’t cost much, if anything. They simply leverage processes that are already in place but just need to be thought about a bit differently.
In many cases I think it’s these grassroots ideas that are the ones that really have staying power. This is simply giving people what they want and need, when it makes the most sense, or in ways that leverage the way our brains work. They help you, as plan sponsors or advisors, show your clients that you understand their jobs, their schedules and their needs. These efforts that allow us to better interact with participants – other humans – is a way to create a culture around saving and being engaged with your retirement. And if participants understand that this culture exists, and it puts their best interests at heart … well, I think we will have their attention.
Plan Talk comes to you from Janus Henderson Investors. A company whose goal is to help you connect with your clients through increased knowledge around investment and retirement issues.
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Plus, if you’d like to continue the conversation feel free to reach out to me. I’d be grateful to hear what you think or about your experiences engaging with plan participants.
Until next time, I appreciate your attention, I’m Ben Rizzuto and this is Plan Talk.