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Three questions plan advisors should ask plan sponsors

Wealth Strategist Ben Rizzuto highlights case studies from the latest edition of our Top DC Trends and Developments report demonstrating how companies are effectively engaging retirement plan participants by asking strategic and thoughtful questions.

Ben Rizzuto, CFP®, CRPS®

Ben Rizzuto, CFP®, CRPS®

Wealth Strategist

Aug 1, 2023
5 minute read

Key takeaways:

  • For plan sponsors, posing the right questions to participants can play a valuable role in creating a well-functioning plan.
  • For example, gauging participants’ understanding of certain concepts can help inform efforts to develop educational resources.
  • Simply asking what information participants would like to receive can also be a surprisingly effective and efficient means of responding to their needs.

A well-placed question can lead to some wonderful conversation. As a plan advisor, part of your job is to make sure you’re asking plan sponsors the right questions. The goal is to get them to think about their plan and their participants so you can work together to create a well-functioning plan that helps participants meet their retirement goals.

In our latest edition of Top DC Trends and Developments, I found several stories about companies that are asking the right questions.

Below, I’ve highlighted three of those important questions, which should in turn prompt advisors and plan sponsors alike to pose similar inquiries to their participants.

Do participants know what a target-date fund is?

According to Morningstar, roughly $1.8 trillion of defined contribution plan assets in the U.S. is invested in target-date mutual funds. Most 401(k) plans — 98%, per Vanguard’s research — include this type of fund in their lineup, and 80% of all 401(k) participants are invested in these funds.1

With that said, selecting a target-date fund (TDF) series, which often serves as a retirement plan’s qualified default investment alternative (QDIA), may be the most important investment decision a plan sponsor makes, in my opinion.

The question is, do participants know what a target-date fund is? Previous research has shown that millions of participants may be misusing TDFs by holding more than one TDF vintage or holding a TDF along with other investments in their 401(k) accounts. This can lead to participants misallocating and possibly increasing their overall level of risk.2

To help combat this problem, San Diego County recently launched “Learn to Earn”, a virtual campaign focused on improving participants’ understanding of asset allocation. The campaign used short videos to explain fundamental topics such as “What’s a target-date fund?”

It’s important to remember that just because something seems like common sense to us, it may not be to someone else, especially when you’re thinking about a diverse participant population. That’s why it’s a good idea to consider those topics and concepts that may need to be reiterated and try to create educational resources that make them approachable and simple to understand.

What financial and retirement information would you like?

When we’re trying to engage an audience, we sometimes fall into a trap of trying  to ask clever questions when a direct question may be a lot more efficient.

An example from this quarter comes from a company called Muncie Power. The company had a goal of increasing participation and deferral rates for a participant population that works across several locations and different shifts. (This raises a bonus question: How can we communicate with participants who work in different places at different times?).

The company created a campaign to help educate participants on several issues associated with the plan. Before creating the campaign, however, they asked participants an extremely simple and direct question: “What financial and retirement information would you be interested in?”

This question led to a campaign that focused on budgeting, the benefits of compounding, and the plan’s auto-escalation features. In this case, listening to participants helped lead to success as the plan saw participation rates jump from 55.9% to 96.7% and the average deferral rate from 3.76% to 6%.

Do participants understand their realities?

The Center for Retirement Research at Boston College’s National Retirement Risk Index (NRRI) measures the percentage of working-age households that are at risk of being unable to maintain their pre-retirement standard of living in retirement.3

This is important because it helps determine if households have a good understanding of their retirement preparedness and, more importantly, if their expectations match their reality. A recent brief from the Center for Retirement Research showed that most households have a good sense of whether they are on track or not. More specifically:

  • 40% are in good shape and know it
  • 20% are in trouble and know it
  • The remaining 40% are either “not worried enough” or “too worried.”4

These findings spark ideas for several great questions plan sponsors could consider. For example, simply asking, “How well are you prepared for retirement?” would lead to some very valuable conversations with participants. Those conversations might allow HR and Benefits departments to remind participants of benefits available to them through the company and retirement plan or help promote enhancements that could be made.

Another aspect of retirement preparedness is making sure participants have a good understanding of their longevity. In fact, I recently wrote about how research has shown that better longevity literacy can lead to better financial literacy.

When we’re communicating with our clients, sometimes all we’re looking for is a quick answer. But we still have to ask the right questions to find the best answers. Those questions may take some time and effort to formulate, but I’d encourage you to consider putting that task on your next investment committee meeting agenda. After all, finding those answers – and most importantly, acting on them – is an integral part of supporting the best interests of our retirement plans and participants.



This information is not intended to be legal or fiduciary advice or a full representation of all responsibilities of plan sponsors and financial professionals.

1 “Target date retirement funds work up to a point. Here’s when you may want to reconsider.” CNBC, March 6, 2022.

2 “Mixed Target-Date Fund Investors: Is There a Method to the Madness?” Morningstar, 2019.

3 National Retirement Risk Index, Center for Retirement Research at Boston College, May 2023.

4 “How Well Do People Perceive Their Retirement Preparedness?” Center for Retirement Research at Boston College. June 6, 2023.